Innovation has become a polluted word with a lot of different meanings. It a one of the buzz words in current management speak, government policy, etc.
But everybody seems to have a different interpretation and it is getting in the way of what innovation should be about. It is NOT about R+D, big research budgets, creative thinking, trend watching, technology, tech transfer, intellectual property, etc., etc. (Although they are all part of innovation).
Innovation is a state of mind and the agility of mind that allows you to spot opportunities quickly and your ability to respond and capitalise on these opportunities. Innovation is also about improvement and making (small or big) changes where needed in your business process or product.
Whatever definition you think is relevant, it is an essential part of business survival. Do or die!