For the purposes of the report, digital innovation was defined as:
Involves the use of digital channels, tools and relevant methodologies to improve the operation of organisations and the delivery of services.The report reviews how Victorian citizens and the Victorian government have adopted digital channels, surveyed Victorian public servants on their online and digital innovation activity and included a series of in-depth best practice case studies of digital innovation by Victorian agencies.
Within government this includes the use of social media and Government 2.0 approaches and channels, as well as broader use of online tools to improve agency management, policy development and service delivery.
It also provides suggestions for fostering digital innovation within government and improve the consistency and cost-effectiveness of services to citizens and capabilities across agencies.
The Victorian government has publicly released the Digital Innovation Review in full, and it can be found at: http://www.egov.vic.gov.au/victorian-government-resources/trends-and-issues-victoria/information-and-communications-technology-victoria/the-victorian-government-digital-innovation-review.html
I hope it is useful for governments and agencies around the world.