Sustainable innovation is widely regarded as a modern strategy for addressing global challenges such as climate change, resource depletion, and biodiversity loss. Yet, its relationship with sustainable development remains complex, as it may also require the abolition of harmful practices (exnovation) or a return to less exploitative modes of action. Moreover, rebound effects often undermine its goals. The chapter critically examines research challenges and conceptual inconsistencies within the concept of sustainable innovation and proposes a more integrative definition. Central paradoxes include uncertainties in future-oriented processes, weak and conflicting targets, and deep-seated systemic barriers. Theories of sustainable innovation are explored at two levels: within organizations, where tensions between innovation and continuity must be navigated, and at the broader system level, where societal transformation is necessary. In organizational contexts such as market-based firms, sustainability must be embedded across all development stages. At the system level, the multi-level perspective (MLP) is used to highlight how niche innovations, regime dynamics, and landscape pressures interact to shape transitions. With regard to effective strategies, the chapter argues that only a combination of deep change toward sustainable practices, broad system transformations, and quick, feasible shifts can lead to substantial sustainable innovation rather than incremental improvements to the status quo. In conclusion, it emphasizes the need for just transitions, supportive regulatory frameworks, and culturally grounded visions of sustainable futures. Special attention is given to infrastructure transformation, not merely as means of efficient public service delivery but reimagined as the socio-ecological foundation enabling sustainable living within planetary boundaries.