I posed this question to my wonderful network of tweeple... here are 4 responses

@chriscummings01 @StewartRogers Innovation is a new idea, system or feature that positively--and measurably-- impacts your product's benefits-to-costs ratio.

@inventeleph @stewartrogers Innovation: Approaching the world looking for different and selecting for better.

@jbrett @StewartRogers creating better solutions to obstacles

@justin_dz @StewartRogers Improvement which is un-anticipated (or under-anticipated).

Anyone want to add their thoughts?

Again, me on twitter ... http://twitter.com/StewartRogers