CIOs who can deliver on the innovative ideas developed internally are those who will build the most successful IT organizations, and, in turn, the most successful organizations.

“Innovation” is a word thrown around quite a bit, but what does it mean to be innovative? What does an innovative company look like? And how do companies become—and stay—innovative?

We asked a number of technology leaders their thoughts on business innovation—what it is, what it looks like, what makes an innovative company. Their responses provide insight into the factors that comprise innovation; notably, they described innovation as a cultural mix of organizational behaviors, habits and traditions, including the encouragement of ideas, the ability to execute those ideas, and the willingness to collaborate and allow ideas to fail.

“We tend to think of innovation taking the form of grand, new, blue ocean products. But the reality is innovation can happen anywhere and anytime if you make space for it,” says Melissa Boggs, vice president business agility at Sauce Labs. “It doesn’t always have to be about products, either. It can be about your daily processes and the way you interact with customers.”

While innovation may arise within mundane business process improvements to grand new business initiatives, staff must not only want to innovate but also have the drive to carry it through, says Mindy Ferguson, managing vice president, technology at Capital One. “For talent to thrive and innovate, you need to have an inspiring purpose and mission. Financial services are core to peoples’ lives, and our technology organization is motivated by the opportunity to build products, services and experiences that can make a real difference in millions of peoples’ lives.”

Redgate Software DevOps Advocate Steve Jones notes that, by definition, an innovative organization will encourage change, because innovation is based on evolution. “It’s a new way of tackling a problem or completing a task. A culture that allows and encourages experimentation rewards taking chances, accepts failure and encourages people to change how they work. This is a delicate balance as we find value in using existing skills and talents to accomplish something. Still, to innovate, we have to change and alter our habits (or processes) and adopt new ones regularly,” he says.

At digital visual management company iObeya, innovation occurs in two forms: incremental and disruptive, says Alexis Kartmann, CTO at iObeya. “The paradox is that incremental innovation needs a culture that fosters both autonomy and sharing, while disruptive innovation needs a culture of Inspired leadership,” Kartmann says. “Autonomy for individuals and teams enables them to try new things, while sharing results of experimentation helps propagate innovations. Inspired leadership is necessary to take risks linked to disruption.”

Innovative organizations also offer a level of transparency such that staff can see how their work fits into the larger company vision. “Visibility is key. When workers understand how their contributions make an impact, they are more empowered to find new solutions and create new value,” Redgate’s Jones says. “This is not by way of quarterly or annual performance reviews; it is through continuous improvement, value stream mapping and creating visual collaborative workspaces where every worker’s projects are visually mapped to the overall company’s strategic goals, timelines and objectives.”

Innovative organizations can also be seen allowing failure, technology leaders noted. “This may sound a little tough, but an innovative culture is one that allows— maybe even encourages—failure. Innovation doesn’t just occur successfully, day one. A lot of mistakes, missteps and just bad ideas have to be allowed to occur before the truly innovative approach, whatever it might be, is discovered,” Jones says.

According to Deloitte’s Global CIO Survey and Global Technology Leadership Study, the average technology budget as a percentage of revenue is expected to reach 5.11% in 2022, up from 3.26% in 2016. As that pace of digital transformation and technology-driven business trends increases, the need for CIOs and business leaders to innovate and deliver on innovative ideas will only increase as well.