Building upon findings from a strategically selected case study of a pioneering Swedish municipality, Jönköping, a participant in a Horizon2020 project on co-creating public service innovations in Europe (CoSIE), this paper illustrates how local municipalities may take a systemic approach to creating necessary conditions for sustainable co-creation and assesses whether this illustrates an ongoing paradigmatic shift in service management and culture.  The strategic change management efforts in adapting a public sector organisation to a co-creation culture are assessed against a normative theoretical framework for such a transformative change (Finansdepartementet 2018; Torfing et al, 2016;). The study employs the concept of co-creation to highlight the paradigmatic shift in the approach to citizens as service end users from passive clients to active citizens with resources and capabilities to exert impact on service design, delivery and value creation. The article offers new insights into how a robust organisation may be moving towards a new public administration paradigm that accommodates co-creation, and especially how a new approach to management based on trust may be strategically implemented as key factor in facilitating systemic change (Torfing et al, 2016). Against the background of a significant shortage of studies exploring how conditions for such a transformative change are created at different system levels, the article examines a longitudinal real-time study and illustrates new management approaches, strategies and tools used. The study also contributes a normative framework to explore a shift to more trust-based steering and a more nuanced explanation of an ongoing managerial shift towards a ‘co-creation’ paradigm. It argues that achieving trust-based steering has major potential to facilitate co-creation culture but that a paradigmatic shift towards such a culture requires congruence in discourses and actions on different system levels and a major transformation of approaches, roles and relationship dynamics between senior and first-line management.