Creativity is a key issue of creating novel applications and interaction methods and techniques. Over two days we ran a hands on prototyping workshop on physical user interaction. We setup teams of 3 people, each team including at least one person with design and one with programming skills. Within about 5 hours the teams had to create a multiplayer interactive game - using a mouse or several mice as basic sensors. We discussed how novelty and the learning curve of interaction technologies relate to physical interaction. The results of the workshop were most impressive… and I think some of them could be really pushed further.
In 2008 there was an interesting issue of Interactions Magazine on innovation. The cover article by Dubberly provides a good conceptual models of innovation . In my lecture on HCI I tyically also introduce the TRIZ ("The theory of solving inventor's problems") methodology, introduced by the Soviet engineer and researcher Genrich Altshuller. TRIZ is interesting to me, as it is in contrast to many other creativity approaches,a systemtic (algorithmic) approach for generating innovative ideas and solutions for problem solving. However I am not sure how well it works in the real world...
During the workshop our approach was very practical. We did also a speed invention exercise - the task was to create 3 game concepts (related to physical penny games) within 10 minutes. The results were pretty impressive - perhaps someone has the time to implement them.
And being in Finland we got the real sauna experience - inside +79°C and then outside into the snow -23° - this is cool (in the very literal sense!).
 Dubberly, H. 2008. Toward a model of innovation. interactions 15, 1 (Jan. 2008), 28-36. DOI= http://doi.acm.org/10.1145/133