Mechatronics design is about integration of mechanics, electronics and software. As new functionality in products is realized to a large extent through integration of mechanics, electronics and software the need for knowledge integration between these disciplines becomes central. Thus, the innovation and product development process has to be able to cope with low and high degrees of innovativeness in the same organization, for the same portfolio. After a brief wrap-up of recent concepts of innovation processes, the authors describe the specific characteristics of mechatronics design. Using the "degree of innovativeness" a key tailoring criterion, the authors will show how the existing and proven concept of idea management and innovation processes proposed by Thom as well as the staged-gate process proposed by Cooper have to be expanded to support mechatronic systems design and development. In the end, using this approach the development of a new product, an electro-hydraulic compact axis, is briefly sketched within the context of the proposed process.