Blistering industry feedback about Enterprise Dunedin pointed to councillor meddling and staff being clogged in bureaucracy.
The economic development and destination marketing agency and the Dunedin City Council needed to "wake up, as Christchurch will eat us", one commenter noted.
Consultancy MyGovernance carried out a review for the council and it strongly recommended a council-controlled company be set up to take over Enterprise Dunedin, supported by a board and stakeholders’ advisory group.
The recommendation is to be considered by councillors next week.
The review highlighted that parts of the business sector had lost confidence in Enterprise Dunedin and council leadership.
Blunt commentary included that some of the largest economic engines in the city had given up.
Dysfunction within the council was having a knock-on effect for Enterprise Dunedin, there was "no clear or consistently communicated vision or purpose" and the council had "an innate distrust of business", stakeholders said.
However, they also said Enterprise Dunedin had passionate and capable staff and the city had a strong and recognisable brand.
"Enterprise Dunedin has strong people and a valuable brand, but is hindered by unclear direction, weak governance and political influence," a summary of feedback said.
"A strategic reset focused on clarity, leadership and regional collaboration is essential to unlocking its full potential."
MyGovernance said the status quo was not viable.
Stakeholders said changing the structure should be a priority and would likely lead to connections being rebuilt.
Mana whenua were clear Enterprise Dunedin should operate as an external agency, the MyGovernance report said.
The report disclosed anonymised feedback from councillors.
Comments from them included that the agency was "lost, off-target, unfocused, under-resourced, confused" and "put-upon by governance".
"Headless chickens, too many hats" was another observation.
One said there was a need to "sing our story" and another said change was needed quickly.
They drew attention to "leadership uncertainty, overreach by governors and lack of political bravery".
A segment in the report about engagement with management redacted who was interviewed.
Themes there included that the structure of Enterprise Dunedin within the council was "not an issue" and "interference or direct influence by councillors is ongoing".
It was also observed Business South "moving into the Enterprise Dunedin space is an issue and distraction".
The consultants commented the most significant story they kept hearing from stakeholders was they had lost confidence in Enterprise Dunedin largely because of actions by the council as an organisation and councillors as governors.
"However, we did not hear they have lost trust," MyGovernance said.
Staff were respected and trusted.
The organisation seemed to lack clarity about its purpose and a "jack of all trades, master of none" perception existed.
Lack of marketing expertise within Enterprise Dunedin was a recurring concern.
When the council decided in November to proceed with a review, some councillors saw no need for it.
The resolution was moved by Cr Andrew Whiley, seconded by Cr Sophie Barker and supported by Crs Bill Acklin, Kevin Gilbert, Cherry Lucas, Mandy Mayhem, Jim O’Malley, Lee Vandervis, Steve Walker and Brent Weatherall.
Crs David Benson-Pope, Christine Garey, Carmen Houlahan and Marie Laufiso voted against.
