This article addresses the evolution of New Zealand's capital city, Wellington over the last three decades, both in terms of its growth into digital and cultural markets but also the way in which it has been driven by New Public Management sensibilities.

The philosophy of New Public Management, which relies more on market solutions and less on government officials as initiators, has had particular impact for capital cities such as Wellington that are not also their country’s dominant commercial centre. Wellington has been challenged to diversify away from government-related employment during the past 30 years. While it has had considerable success fostering tourism and software and film production, since 2008 growth in employment has been almost non-existent, contrasting with strong growth in Auckland, New Zealand’s largest city and commercial centre. In 2013, John Key, prime minister in the country’s centre-right government, triggered debate and local action with an offhand comment: ‘even Wellington’s dying ... all you have there is government, Victoria University and Weta Workshop’.

In fact, Wellington is a relatively prosperous city at the heart of a region with a largely urban population of 480,000 which has New Zealand’s highest average incomes, with nearly 50% of work in higher-skilled knowledge roles, contrasting with 33% nationally (Wellington Regional Council, 2012, p.3). The anxiety in Wellington, which has prompted a rethinking of strategies for economic development, reflects growing international debate about the likely impact of technological change on work and responses needed from public organisations. The 20th anniversary conference of the International Public Management Network is a timely prompt to reflect on the leadership which might be expected from public administrators and managers during the early stages of a ‘fourth industrial revolution’ (Schwab, 2016).

If cities are to be generators of digital-era innovation, more activist ‘ecosystems’ of capability building and connectedness are needed. Wellington is a capital which has been significantly changed by New Zealand’s adoption of ‘more market’ strategies at a national level. Wellington’s current challenge is an example of an international pressure for local public sector leaders to explore new ways of leveraging limited public funds to create distinctive competitive advantage for the increasing pace of change of a ‘fourth industrial revolution’.