Observation, connecting them and Technology awareness are key for Innovation.
Let me explain with some example of problem in everyday life and need innovation.
Observation: Your door changing(sink or expand ) with change in weather.
Connecting: Connecting it with any other similar problem or solution
Technology Awareness: This is important for great and out of box solution. Say if I have only knowledge of wood, I will mostly focus my solution around wood. If I have knowledge of Iron may include that too in my solution. and so on … So, we can say out of box or best solution may be proportional to technology awareness.