Hugh MacLeod: Advice for Entrepreneurs includes the following gem (along with others in his list).
"People want what they can't have. In fact, that's pretty much all they want."
That question would be a great starting point for a product innovation exercise.
Start by finding and listening to a community (a group of people who are proven to actively, frequently and passionately interact with one another) and find out what they want and don't think they can have.
O.D.O.o.O.D.B.
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