Innovation is synonymous with successful development and implementation, and therefore peculiar to innovation is that it has to prove itself on the market before we can deem it innovative. This paper suggests an approach for understanding the principles for innovative products which is based, not on the product itself, but on the activity and the effect on stakeholders. Innovative products are products that contain a difference, with appropriate, valuable and desirable effects induced on the company, consumer and society. The approach is exemplified through a case on the Sony Walkman. When designing products compaies should consider the main stakeholders and the effects of products throughout their life cycles that companies should consider.