This chapter contributes knowledge on the challenges of collaboration within local community regeneration in order to identify innovative approaches at work in smaller cities through case studies in Sweden and Norway. Place innovation perspectives are applied to address issues of diversity and inclusiveness in the renewal of a small city centre or district based on cultural heritage. In-depth qualitative interviews in 2016–2018, participatory observations and document studies were conducted. The results reveal stakeholders' views on challenges related to collaborative approaches for place innovation. The complex nature of the two cases is characterized by diverse perspectives, conflicts and attitudes; limited inclusion of stakeholders; lack of digital communication and information as well as face-to-face information, and indistinct place identity. Findings indicate that place innovation requires an integrated approach based on including diverse stakeholder perspectives through common communication spaces, cultivating place identity and applying a step-by-step regeneration.