If you want to innovate, we think the best thing to do is to find unmet user needs. This often means observing or interviewing customers to see where they are unhappy with the staus quo.
Once you have found unmet needs, you can look for opportunities to meet those needs, which in turn provides value to customers. That value can represent new services and business models that customers will be happy to pay for.
Discovering user needs usually means some kind of user research. This can be qualitative or quantitative. Or, "qual or quant". A typical qualitative research might involve scripting an interview with unbiased questions, then interviewing 8-16 customers and asking specific questions about a typical day. Quantitative research might involve designing and publishing a survey to hundreds or thousands of consumers.
If you want to learn how digital leaders are appraoching this, we'd strongly recommend the book Non-Bullshit Innovation, by David Rowan, the editor of WIRED UK.