There has been a lot of discussion around innovation in the past few years, especially as to whether it is different from continuous improvement.  I believe it depends on the degree of change involved.

A disruptive innovation is certainly more than incremental improvement, as it often remakes the market.  FedEx overnight was one such development.

According to Innosight (2005) only 25% of the new products which established companies bring to their market succeed (I'm glad to say I have had a 66% success rate over the past 25 years).  Failure can be related to timing, the degree of behavioral shift required, the value proposition, etc.

But it's for sure that disruptive innovation will beat continuous improvement every day if you want to remain in business. Here's a nice short article on one view of innovation.