Andrew Mills has written an interesting post on Innovation. He's asking product managers for views on the importance of innovation in their role.
I'd say for product managers in a web company, its right up there.
A few thoughts on innovating:

• Competition in most mainstream markets is fierce. Positioning and differentiating products is therefore increasingly important. When conducting competitive analysis you really need to ask how you can create an inventive solution to a problem that has probably been posed before. One of the best ways to achieve value therefore has to be to approach old problems in innovative and creative ways.
• With so much choice, there's also the basic and increasing pressure to "delight" people either with what your product does, or how it looks/what the user experience is. So you have less and less choice but to focus on “delighting” as well as procuring commercial advantage from your product.
• Innovation is hard. Probably, it is more an ever-present goal than anything else. There are no guarantees with innovation, but I think the pursuit of attainment must make it more likely that you will succeed.
• Finally, how do we judge real innovation? Sure you can pluck example from the air like the i-phone, for example, but there are lots of levels. I find masses of innovation in the way web companies develop sites that present information in new ways (alltop and cork'd spring to mind as executions that do old jobs in new ways). So, in many ways, even now after more than a decade, there's evidence all over the web that innovation ranks very high with pm's.

Would love to hear what others think about innovation and how they mould it in to their development processes....?