Innovation is defined as the development and implementation of new ideas by people who over time engage in transactions with others within an institutional order. This simple and seemingly innocuous definition has major implications for managing innovation. This definition focuses on four basic factors (new ideas, people, transactions, and institutional context). And understanding of how these factors are related lead to four basic problems confronting most general managers: (1) a human problem of managing attention, (2) a process problem in managing new ideas into good currency, (3) a structural problem of managing part-whole relationships, and (4) a strategic problem of institutional leadership. Appreciating these problems and their consequences provides a first step in developing a practical theory on the management of innovation.