Innovation is the introduction of new ideas, goods, services, and practices which are intended to be useful (though a number of unsuccessful innovations can be found throughout history). An essential element for innovation is its application in a commercially successful way. Innovation has punctuated and changed human history (consider the development of electricity, steam engines, motor vehicles, et al). Economic planners now tout innovation as the route to technological fixes to the crises of capitalism (for instance, achieving environmental sustainability and cleaning up damage), and it is a central element of many policies to increase competitiveness at corporate and national levels. Diffusion of innovations theory, the way in which innovations get accepted by new groups of consumers, was pioneered by Everett Rogers, who drew from early studies by Gabriel Tarde.
Whether innovation is mainly supply-pushed (based on new technological possibilities) or demand-led (based on social needs and market requirements) has been a hotly-debated topic. One point of view is that "recognition of demand is a more frequent factor in successful innovation than recognition of technical potential." (Marquis 1969)
Innovation in business is achieved in many ways, with much attention now given to formal research and development for "breakthrough innovations." But innovations may be developed by less formal on-the-job modifications of practice, through exchange and combination of professional experience and by many other routes. The more radical and revolutionary innovations tend to stem from R&D, while more incremental innovations may emerge from practice - but there are many exceptions to each of these trends.
Innovation need not be technological. For example, when McDonald's applied the production line concept to producing restaurant food, it could use low-skilled workers to produce large amounts of food of a standard quality, quickly - thus inventing the fast food industry. Today this could be covered by a US Business Method Patent even though there is no technological novelty.
Innovation might be enhanced by following specific theories and practices such as TRIZ, the theory of inventive problem solving.
"(Innovation is) an idea, practice, or object that is perceived as new by an individual or other unit of adoption." - Everett M. Rogers, 1995
"Innovation is the sequence of activities by which a new element is introduced into a social unit, with the intention of benefiting the unit, some part of it, or the wider society. The element need not to be entirely novel or unfamiliar to members of the unit, but it must involve some discernable change or challenge of the status quo." - Michael A. West ; James L. Farr , 1990
Innovation, according to Regis Cabral, for a particular network is a new element introduced in the network which changes, even if momentarily, the costs of transactions between at least two actors, elements or nodes, in the network. Sources: Cabral, R. (1998) ‘Refining the Cabral-Dahab Science Park Management Paradigm’, Int. J. Technology Management, Vol. 16, pp. 813-818; Cabral, R. (2003) ‘Development, Science and’ in Heilbron, J. (ed.), The Oxford Companion to The History of Modern Science, Oxford University Press, New York, pp. 205-207.