The difference between continuous improvement and innovation
Perhaps I can best illustrate by using an analogy. Someone who uses a "paint by numbers" kit and a famous artist - let's use Picasso - can both be called "artists". After all, they both use the same tools - paint and brushes, and they both produce finished paintings. But, which would you pay more for? Which is an incremental improvement and which is a masterpiece?
The problem with Six Sigma, Lean and Continuous Improvement adherents is that they act as if innovation is somehow derivative or subordinate to these tools, rather than acknowledging that innovation is a much broader set of outcomes and capabilities, and that continuous improvement is a small portion of a much larger innovation umbrella. When innovation is defined in the context of Continuous improvement, it loses it's power to engage and to create, to generate completely new and unexpected products, services and business models. Instead it is held captive to those who would seek a predictable but incremental solution every time.
The difference between the "painter" who dabs paint into numbered sections on a prepared canvas, and Picasso is that the paint by numbers adherent is merely improving an existing product, while Picasso is creating something new and unexpected. In the paint by numbers example, there's little chance of failure, but the outcome is also fairly predictable - if not already presented on the box. With little skill and little risk comes little reward. If you want to call that innovation, that's fine, but your definition is far too limited.
A more comprehensive innovation definition will definitely include continuous improvement or "incremental" innovation, but expands to include radical or disruptive innovation which creates new and unexpected products, services, business models and other valuable outcomes. We need this definition because it's possible to conceive of great new products and services that aren't based on incremental improvements to existing products, but the continuous improvement definition treats these outcomes as if they were magic. They aren't, they are just the result of a more expansive definition and expectation for innovation.
Continuous improvement has its uses. If the expectation and goal is to modestly improve an existing product or service, then continuous improvement makes sense and should be applied. However, if the situation or need calls for a truly new product or service, continuous improvement can't countenance that need. It turns to existing products and services and seeks to make them better, rather than confronting the fact that consumers or markets may require a completely new, radical and undefined solution. This is innovation too, and it's not magic, just a different way of framing the definition. Some of the tools are the same in incremental and disruptive innovation, but the mindsets, the expectations and the leaps of faith are very different. If your innovation outcomes often result in products and services that look a lot like the products and services you already possess, your teams are too focused on continuous improvement.
Another difference between continuous improvement and disruptive innovation is that disruption (or creating entirely new products and services) requires creativity and the ability to recognize and respond to emerging or latent needs. No one ever asked Picasso for cubism, and no one else was doing it until he created it. Picasso was willing to step out of the impressionist school and create an entirely new way of looking at the world. Anyone following a paint by numbers method will struggle to develop something new or different, until they choose to ignore the recommendations that link a paint color to a specific section of the painting, and go their own way.
Stop defining innovation by the tools you use, and start defining the innovation you need and want to do by the outcomes you expect. The fact that I have a hammer in my garage does not make me a carpenter. The fact that you can follow a manufacturer's color scheme does not make you an artist. We need to remove these cramped and incorrect definitions of innovation, so our teams can fully explore and engage all that innovation has to offer.