Anything different from the norm that can create a value. Innovation can happen with processes, marketing, products or services. If I have to wait in long queues for half an hour at Maryland bus stop to get on the bus because there are only two ticket sellers attending to about a 100 people, innovation can take the form of an electronic card that can be read by a device installed in the bus that will enable me cut the queue and get to my destination a lot earlier.
Innovation can be a huge breakthrough or even an everyday improvement that makes the complicated a lot easier or the expensive a lot more affordable.
Organisations with a culture of encouraging innovation or consistently churning out innovative ideas and breakthroughs will always remain relevant with customers.