What does innovation mean in a library?

In the business world, innovative firms, it is said, "grow twice as fast, both in employment and sales, as firms that fail to innovate" (that's from the Hargreaves report). This raises a couple of questions: first, what is innovation in a library, and second, why is it important for libraries - to what extent are the laws that govern the business world, referenced here, actually applicable to the culture sector?

On the one hand, it's hard for libraries to innovate in the manner of a start-up or SME; not many libraries have that kind of in house development available to them. But this isn't about libraries becoming a business, they can innovate in other ways, and can outsource those development tasks as required (and if it can be afforded). The most obvious area for innovation is building collections; there are a whole bunch of ways to build content now if you take advantage of some of the stronger aspects of digital technology. At this point, for specialist libraries interested in such things, traditional targets for acquisition are becoming scarce and expensive (I'm thinking about books and manuscripts here, or the archives of persons of historical note), this is not to mention that much of modern culture has a digital presence, more so than analogue (which will include the archives of anyone of any prominance today).

Essentially this boils down to born digital content, which could take the form of archives, a shared resource digitised previously elsewhere and audio-visual material. While these collecting methods are perhaps innovative within the current context, they are probably the bare minimum for the maintenance of relevant collections development and still function largely within the traditional library operations model. However, to effectively acquire and leverage this complex content, commercial collaboration seems an obvious route. In the same way that building a digital library requires the breakdown of knowledge silos within that specific institution, the viability of libraries themselves will increasingly rely on breaking down 'silos' between sectors, specifically the commercial content industry, whereby both parties can achieve mutually beneficial goals and expand in new directions.

I'm aware of various apps that have been produced for exhibitions at some the UK's larger cultural insitutions, but I'm interested to find out the extent to which cross-sector collaborations of mutual benefit have been examined or implemented in order to build collections and user experience in a pretty fundamental way. The problem that libraries face, I suspect, is the risk that comes with innovation, and they may not be able to stomach that alone. My interest in this comes from wondering to what extent libraries are actually now in competition with other information providers, which might necessitate an innovative path forward, just as the businesses referred to in the Hargreaves report are required to do in order to thrive.

Finally, while risk is inherent to innovation, not all of it is explicitly financial and there are some areas where libraries can really take a lead. For example, the recent 'academic spring' highlights a long-standing problem: the cost of academic journals (have a look at this article in the Economist for a picture of the farsical profit margins enjoyed by publishers at libraries' expense). Libraries could really be leaders in this movement; they could also be leaders in bringing intellectual property legislation into the twenty-first century; they could (and probably already are) leaders in how to provide compelling online information resources on a tight budget.