Strategy+Business / knowledge@wharton - How Companies Turn Customers' Big Ideas Into Innovations - January 2005 In this jointly published article, the two publications jointly look at the factors stopping firms from improving innovation processes and list out the key characteristics of successful companies:

1) Employees use the product
2) They conduct vigorous market research of customer needs
3) The Engineers stay close to the market
4) Companies perform R&D around the world
5. Innovative companies seek understanding of customer behaviour and motivations

An interesting article, although a slightly long winded way of saying "listen to your customers"...