I think innovation requires just four things:
1. idea management process – i.e. go from suggestion box-to-value creation
2. a reward mechanism – where the ultimate reward is working in an innovative company
3. scanning – i.e. scanning internally and externally for trends and small ideas that need to be nurtured
4. a structured approach to analysing the organisation to determine where to apply innovation
I think the structured approach bit (#4) is often missed and without it how do you grow or evaluate your ideas?
As an IT guy I know enterprise [business] architecture is the answer to this.
However, for a more general audience I think this approach is very interesting (free PDF book extract to download):