Innovation should be driven by your brand and what it stands for. The trick is, it has to stand for something first.
Most innovations fail because they only provide a functional benefit to the customer that can be easily copied and 'value-engineered' by a crafty competitor in less time than you can say "Let's manufacture it in China."
True innovation is an the artful blending of business strategy, consumer insights, technological improvement and a brand promise that differentiates you from everyone else. Leave out one element and you might as well not even bother.
That's what made Facebook sticky and MySpace an also ran.
That's how iPod was able to bury Zune.
That's why Swiffer was able to dust the Clorox ReadyMop.
That's what differentiates innovators from imitators.