From an interview with Steve. Too good not to turn it into a blog post ...

"When people talk about innovation they are often talking about the solution to some problem. But the real source of innovation is figuring out what the right problem is to solve. Take Gilt for example: Gilt took the invite only friends & family sample sale invite that existed for coveted brands in cities like New York and moved that model online.  This allowed consumers all over the US to have access to designer apparel and accessories for a short period of time, similar to a two day offline sample sale, and it allowed the brands to have another outlet to sell end of season merchandise.  Gilt was perfectly positioned to meet both the brand’s needs and the customer’s needs. The identification of the problem is the hardest part. The solution, once you’ve identified the problem, tends to be pretty easy. If you give any set of engineers a problem, they’ll figure out a solution with confidence. But really, picking which problems to go after in a world of limited resources is where the magic of innovation happens. I think often times people focus on a solution or cool technology that’s really innovative, but it’s only innovative if it solves a substantial problem."

True, true, true, ... let's continue to find and pick the right problems!!!