The following comprehensive statement from the great ottoman scholar al-Birgivi summarises the usage of the two definitions of bid’ah by the classical scholars:
“If it is asked how is his (upon him be blessings and peace) statement ‘every bid’ah is misguidance’ reconciled with the statement of the fuqaha that bid’ah is occasionally permissible (mubah) like using a sieve and the perpetuity of eating the wheat kernel and being satiated thereby; occasionally preferable (mustahabb) like erecting minarets, schools and the compilation of literary works; rather it sometimes becomes obligatory (wajib) like the furnishing of proofs to refute the doubts of the heretics and their like?
“We say: bid’ah has a linguistic general sense irrespective of it [being related to] custom or worship, because it is a noun [derived] from ibtida’ with the meaning of innovation…This is the categorisation in the vernacular of the fuqaha. They mean by it anything introduced after the first period…
“And [bid'ah] has a legal qualified sense which is to increase in the religion or decrease from it after the Companions without the permission of the Lawgiver, neither verbally nor in practice, and neither explicitly nor allusively. So it does not in principle include customs, rather it is restricted to beliefs…and certain forms of worship. This is his (Allah bless him and grant him peace) intent in his statement ‘every bid’ah is misguidance.’ [That legal bid'ah does not include customs is proven] by the indication of his (Allah bless him and grant him peace) statement ‘adhere to my sunnah and the sunnah of the rightly guided caliphs’, ‘you are more knowledgeable in your worldly matters’ and ‘whoever innovates anything into this matter of ours shall be rejected’” (Al-Tariqat al-Muhammadiyyah, Vol. 1 p. 120)