Innovation is the process of converting knowledge and new ideas into benefits, which can be new or improved products, processes or services. On competitive markets, innovation drives business growth as the catalyst for change. According to Joseph Schumpeter, innovation by entrepreneurs provides the disruptive force necessary to sustain economic growth through "creative destruction", where industries must constantly revolutionize their structures with better products and processes.

1. What is Innovation?
Pierre.Dumas@Multi-City.org
In business operations, innovation is the conversion process of
knowledge and new ideas into benefits, which may be for commercial use
or for the public good; these benefits may be new or improved products,
processes or services, new commercial approach or new organizational
structure.
On competitive markets, innovation is the catalyst to business growth.
In economics, Joseph Schumpeter (1883-1950) considered innovation by
entrepreneurs as the disruptive force required to sustain economic growth,
even if, on one side, it destroys the value of established companies and
jobs.
As such, Schumpeter famously popularized the expression « Creative
Destruction », asserting that industries must incessantly revolutionize the
economic structure from within with better or more effective processes and
products.
References:
http://en.wikipedia.org/wiki/Innovation
http://en.wikipedia.org/wiki/Creative_destruction