Kevin Kelly's CT2 blog (Conceptual Trends, Current Topics) has an interesting entry up about innovation:
How to Make New Things
Paul Graham, an engineer who can write and think clearly, derived a reliable way to make new things: work on overlooked problems. I found the following bit of advice to not only be true, but profound.
Graham describes his strategy precisely: "Find (a) simple solutions (b) to overlooked problems (c) that actually need to be solved, and (d) deliver them as informally as possible, (e) starting with a very crude version 1, then (f) iterating rapidly." That seems simple, but it is not.
Definitely worth a read.