This has been said many times before but I'll say it again. It's not about technology or innovation. It's all about customers and sales. I've noticed recently that you have lots of entrepreneurs always pitching their newest "mousetrap". Unfortunately, the discussion about how you're going to find customers for your product and sell it to them comes late or never. If you're going to send your business plan to a VC or pitch their partnership make sure you address this issue right up front. Convince them that you first know who your customer is. Second, make clear that you know how to address these customers. Finally, show that these customers will spend their hard-earned cash on your product. It's always sales that kill most early-stage businesses. I can't remember ever saying "shit, we're going to fail with this one because of the CTO!"
I have to admit that when sitting in a pitch hearing endlessly about tech and how innovative a product is, if I don't hear the business case, it all becomes "blah, blah, blah". Of course I have to be convinced that you have a USP in regards to your product and this will most likely be technology related. There have simply been too many companies though that were far better technology-wise yet never made it.
It's also the news in the press and blogs nowadays. You're often hearing about how innovative something is and there are new products here and there constantly. Yet, when I think which companies make it, it's hardly ever the technology which first comes to mind. I was just reminded of this when playing with Foursquare this morning. This is so not rocket-science yet people are using it and I have to admit it's addictive. Look at all the attempts out there to crack the LBS nut. I believe Foursquare is on to something. Sure, it's like Twitter in that it hasn't yet figured out it's business model but I can already see there's money there. Same is the case for Twitter. Give me this feeling when I am listening to your pitch. I don't need to see the break-even point. I need to see the huge exit down the road thereafter.
Note: this is very VC related. If you aren't raising venture capital, you'll have different issues to address up front and this is necessary.