Introduction: Innovation is one of the top priorities of today's organizations globally. As organizations strive to remain competitive in the market, they introduce innovative strategies to develop new ideas in product development and customer satisfaction. In an ideal world, innovation in an organization would lead to the efficient delivery of quality service while ensuring customer satisfaction. Some researchers conclude that innovation can be sector or industry specific (Lawson et al, 2001), however what really drives innovation in an organization is a complex combination of leadership, environment, strategy and management style. With these key factors in mind, this research study aims to explore the framework of innovation in water services organization and propose recommendations on how to improve the innovation process. In the next section, a glossary of key terms will be presented followed by a brief discussion of the current innovation framework implemented in state water utility organizations. The next section will examine in detail the role of innovation in organizations, focusing on innovation strategies and alignment with the innovation process. Glossary of key terms Innovation There are several definitions of Innovation scattered in the literature (Denti, L. & Hemlin, S., 2012, Vilà, J., 2007, Nijstad, B, Berger-Selman, F & De, CW., 2012, Hobbs, B., Aubry, M. & Thuillier, D., 2008, Hameed, MA, Counsell, S & Swift, S., 2012). By far the closest definition to this research article is suggested by West and Farr (1990). They describe innovation as “the intentional introduction and application within a role, group or organization of ideas, processes, products or procedures, new to the relevant unit of adoption, designed to sign… halfway of the sheet.... ..C., 1996, Perspectives on innovation in organizations, Organization Studies, vol. 17, no. 1, pp. 107-129.18- Teece, DJ & Pisano, G. (1994) The dynamic capability of firms: an introduction. Industrial and Corporate Change, 3(3), 537–55619- Vilà, J., 2007, Leadership and Innovation, in Next Generation Business Handbook: New Strategies from Tomorrow's Thought Leaders (ed. S. Chowdhury), John Wiley & Sons , Inc ., Hoboken, NJ, United States. doi: 10.1002/9780470172223.ch1&320- West, M.A. and Farrr, J.L. 1990, 'Innovation at Work', in West, M.A. and Farr, J.L. (eds.), Innovation and Creativity at Work: Psychological and Organizational Strategies, Wiley, Chichester, pp.3-13.21- Zaltman G, Duncan R, Holbek J. Innovations and organizations. New York: Wiley, 22.1973- http://www.melbournewater.com.au/aboutus/reportsandpublications/Annual-Report/Documents/2013_Annual_Report.pdf