there are 'innovations' that are truly new and breathtaking, no matter how obvious they seem afterwards (like the straw and the paperclip)...but the most common is the "Hints from Heloise" kind..(a newspaper column where readers send in clever things they have done to make life easier. This usually involves recognizing in a object a use it was never designed for (unwinding wire coathangers to make car key snaggers*grin*)

Since I do woodturning for a semi-living, my head is FULL of little tricks/inventions to hold, mark, fit, control...etc., wood and tools. This is MY answer to the question:
"what kind of environment makes successful innovation more likely? " need to address a situation never encountered before.

A high school physics teacher used to give his kids problems to solve to test this...one I remember was dropping a ping-pong ball down a pipe it barely fit into and challenging them to get it out without damage...all sorts or idea were put forth, some pretty complex and silly...until one student suddenly went to the sink, filled a beaker with water and poured it down the pipe and floated the ball out!

Who knows how these "ah-ha" experiences come from?...but as you have more & more, a pattern develops where you begin to 'see' things differently and nothing is ever JUST a widget anymore.