Potential products must possess certain characteristics to fall within one of the realms of innovation. You can't build a competitive advantage simply making linear or incremental improvements unless these improvements differentiate you in the marketplace, because being better has become part of the mainstream. Starting in the 1970s, the quality movement initiated in Japan made products more reliable. This led to the Six Sigma method, introduced by Motorola, to eliminate defects. Quality, once a defined discipline within manufacturing, now is an accepted tool that permeates all parts of product development. Industrial design, like quality, is also now an expected item in the product design toolkit.

Albert Einstein is purported to have said, "We can't solve problems with the same thinking we used to create them." In the same way, a company can't innovate without thinking differently. And this new way of thinking extends beyond the company to affect external behaviors. Before the introduction of the Sony Walkman, for example, it was cool to blast music on a boom box. The Walkman completely changed expectations and behavior, creating a new market for personal sound/information devices and paving the way for such products as MP3 players and Apple's iPod. Today, music listeners make a statement silently with wires hanging from their ears.

Just as incrementally improving on a product without adding additional customer value is no longer sufficient, innovation for its own sake (in a business context) is inadequate. Innovation, including incremental improvements, must...