Problem, Opportunity, Trend or Threat
If you think about it, most new products or services come about because someone wants to solve an existing PROBLEM. In fact, many of the best innovations solve problems that many of us have recognized but simply put up with for years. Solving a problem can make it a lot easier to identify the customer base, the potential market acceptance of your innovation and will generally make it easier to communicate your value proposition.
Identifying an OPPORTUNITY means seeing something that others fail to see or identifying a gap or hole in the market that others have failed to take advantage of. An innovation that is targeted to an opportunity is more difficult to quantify, since there are few if any competitors and customers may not even be aware that they have this unmet need.
Identifying TRENDS is probably one of the best ways to "Get there first" and have leading edge products or disruptive products and services. Many firms identify trends but few do a good job of synthesizing and analyzing trends and converting that knowledge into new products and services. Innovating around trends can be risky as well - anyone remember the downside of the "pet rock"? After the initial euphoria, a lot of people realized that they were spending good money for a rock with a face painted on it. Maybe we should separate "fads" from trends.
Finally, innovating around a THREAT is fairly reactive in nature - but often necessary. The threat indicates that your team has found itself behind a competitor or that a new solution has emerged that threatens your products or services. Innovating around a threat is what seems to happen most often, since it is hard to convince people to pay attention to innovation in the absence of a threat.
All of these are viable reasons for innovation, but each represents a very different place on the proactive/reactive spectrum, and demonstrates the firm's willingness to take on risk. Will the firm proactively innovate in new spaces (OPPORTUNITY) or react to what others do (THREAT)? Will it solve a problem (INCREMENTAL) or create something new and disruptive (TREND)? How do you classify your ideas?