I have been doing a bit of research over the last week to see what academics and researchers think the innovation process is.
There is lots of stuff on this relating to the private sector but relatively little that relates to the delivery of public services. But I have found two which might be helpful:

Source: Innovation: A roadmap for homeless agencies - npfSynergy - 2003
And this one from the Cabinet Office report by Geoff Mulgan and David Albury:

Source: INNOVATION IN THE PUBLIC SECTOR - [ver 1.9 October 2003] - Geoff Mulgan and David Albury
Comments
A further adaptation of the Mulgan and Albury model
This comes from the Hartley report available here: http://www.communities.gov.uk/index.asp?id=1500174
Innovation process models
I think the second (Mulgan & Avery) model - the cyclic model is far more in keepign with everything I've ever been taught about design. Linear models are generally not workable. Also, it fist nicely with the nice circular model we are using for the core process model.
Andy
Innovation process
Simon - Dave Pollard has a lot of papers and references at his blog How to Save the Word. See this page, scroll down for innovation process