This chapter considers innovation in construction starting out with an appreciation of what construction production on-site entails. It highlights the heterogeneity of firms in project consortia. The chapter also considers the matrix of corporate and project organization of construction production. It discusses what the nature of project-based construction production is and framing the construction innovation issue as one pertaining to the systemicness of construction. On a construction site, activity systems are dedicated to the production of well defined subsystems of the built object, such as the concrete structure, the facades, the internal walls, the plumbing, the electrical system, the ventilation system, the lifts, and so on. It is important to note how the elements of an activity system are dynamic and mutually dependent. Change in one element generally depends on and can trigger changes in the other elements.