The three system CGIAR research programs on Integrated Systems for the Humid Tropics, Dryland Systems and Aquatic Agricultural Systems have included "capacity to innovate" as an intermediate development outcome in their respective theories of change. The wording of the intermediate development outcome is "increased systems capacity to innovate and contribute to improved livelihoods of low-income agricultural communities." This note captures the authors collective thinking about this intermediate development outcome from a systems perspective to clarify it and inspire other programs."