from EmcArts (they have a lot of innovation resources available on their website):

Organizational innovations are instances of organizational change that:

• Provide new pathways to fulfilling the mission
• Are discontinuous from previous practice (not a logical extension of ‘business-as-usual’)
• Result from a shift in underlying organizational assumptions

Also – once again I would recommend Jack Ukeles’ presentation, “Doing More With Less” (download here) as a guide towards creating innovation and organizational change.