In recent years, urban public spaces have increasingly been regarded as potential arenas for social innovation; however, our empirical understanding of how these capacities are realized—particularly in non-Western contexts—remains limited. This study aims to identify and prioritize the factors influencing the role of urban public spaces in social innovation, with a special emphasis on analyzing urban management policies and actions, through a case study of Ferdowsi Street in Sanandaj. The scientific contribution of this research lies in presenting a validated quantitative model comprising six key mechanisms that enable social innovation within a pre-existing public space—an approach not previously tested empirically in the urban literature of developing countries. Adopting a quantitative approach and utilizing a questionnaire (validated through Delphi and Cronbach's alpha), the study collected data from 142 key actors (urban managers, academics, artists, and NGO members). The data were analyzed using PLS-SEM, confirming a six-factor model: social dynamics (0.907), design innovations (0.846), managerial innovations (0.845), institutional-structural innovations (0.804), environmental innovations (0.789), and spatial sustainability innovations (0.385). Social dynamics, emphasizing spatial justice and inclusiveness, emerged as the strongest predictor. The theoretical contribution of this research is providing an analytical framework for urban policymakers in similar contexts, highlighting the primacy of social dynamics and introducing a new type of "soft space" emerging from lived experience—one that underscores the key role of everyday interactions, feedback-driven design, and stakeholder participation in realizing social innovation. Urban public spaces become effective platforms for social innovation when they transcend mere physical functions and transform into interactive ecosystems centered on stakeholder engagement and feedback-oriented design. The findings underscore the necessity of revising design and urban management policies toward participatory and inclusive approaches.