For at least ten years now, librarians have been faced with growth in client demand at the same time as a decline in funding levels. In order to cope and to maintain productivity, libraries have pursued a number of strategies including: the use of automation to achieve efficiency in the allocation of staff resources; participation in bibliographic and resource sharing networks; and the introduction of marketing and fee-based services to recover the costs of some services. These strategies all prevent libraries from falling behind but do not necessarily move libraries forward. The real challenge for library managers is how to improve productivity and release enough slack in the system to invest in planned innovation. What is 'productivity'? What is 'innovation'? How can a manager create purposeful, focused change? What are the strategic and organisation development issues involved in improving productivity and creating an innovating organisation? What types of organisation structure foster productivity and innovation? These are some of the issues raised and discussed by the paper based on the experience of the University of Canberra Library and the management theories about productivity, innovation, strategy and structure.