TL;DR Faced with a dwindling market for their primary product, car seats, due to offshore outsourcing, CSM, a prominent UK manufacturer, underwent a radical transformation. Shifting from a product-centric to a competency-centric approach, they successfully shifted not once but twice into distinct and unrelated markets based on their competencies. This strategic pivot not only revitalized their business but also established them as an innovative player, showcasing the importance of agility and the ability to identify and align core competencies with new market opportunities.
Introduction
Imagine a company at the pinnacle of its industry, a renowned supplier of quality car seats to some of the most prestigious automotive brands in the UK. This was the world of CSM (anonymised for confidentiality). However, a seismic shift in the industry’s landscape began to unravel. The rise of offshore outsourcing towards a cost-effective production alternative started to erode CSM’s market stronghold. The core product that had been their pride and livelihood, the car seats, faced a dramatic decline in demand. This was not just a setback; it was a harbinger of potential obsolescence.
Today, we will delve into the journey of a UK-based car seat manufacturer who, faced with the decline of their primary market, embarked on an extraordinary path of reinvention and diversification, proving that adaptability is the cornerstone of staying relevant and profitable in an ever-changing market.
Challenges: Facing Down the Obsolescence
CSM is a renowned car seat manufacturer in the UK for their quality products supplied to prestigious automotive brands like Ford, Jaguar Land Rover (JLR), etc. As one of the main UK suppliers of car seats, CSM was very comfortable, until the offshore outsourcing kicked in towards Y2K. As production of most car parts was shifted to countries like Malaysia and China due to the lower cost, the company’s primary product, car seats, was no longer in demand. The outsourcing trend left them grappling with a shrinking market and the looming threat of obsolescence. So, simply, the market has gone. what should CSM do to survive?
When challenged with the survival question, CSM’s answer was to Transform and Shift their focus. However, the leadership team’s thoughts were so product-oriented that they kept attempting similar products, such as chairs and sofas. And, of course, hundreds of competitors, who were also facing extinction, were thinking along the same line. So, any “seating” solution was a very predictable red ocean, and whoever entered would dive into a price war.
The Transformation Journey: Identifying Core Competencies Beyond Car Seats
Seating was merely a surface-level solution, and the company was still thinking about products from the same category they usually produce. As long as the transformation is based on the product, the so-called transformation would lead to alternative products. These products are “what they make”. How about something new that “they CAN make”? The thought started shifting from thinking of products to thinking of competencies – those key capabilities, processes, and skills to “make” something. So CSM started with analysing their area of expertise, and deeper introspection revealed that their true expertise lay in the realm of metal processing – a car seat is made via a suite of processes such as metal cutting, wiring, polishing, bending, and CNC machining. This was a pivotal moment to understand what CSM is truly capable of regardless of their current products and market. And this marks the beginning of their transformation journey.
The opportunities: From Car Seats to Body Piercing Jewellery
Now, with the understanding that they have a strong capacity in the metalworking area, CSM started looking for opportunities in different markets and industries where their metalworking competencies could be leveraged. By analysing the market through the lenses of competencies rather than products, CSM identified a completely unrelated yet lucrative market – body piercing jewellery. This sector, though vastly different from automotive, required almost entitle the same metal processing skills. With minimal additions to their production line and investment in smaller-scale machinery, they began crafting various types of body jewellery. This strategic pivot paid off spectacularly, as within five years, they emerged as the leading exporter of body piercing jewellery from the UK, capturing new markets across Europe and beyond.
Try it again to Meeting New Market Demands
After being one of the best manufacturers in Body Piercing Jewellery for a decade, the company found itself again in the same pot when the market began to saturate with the influx of cheaper alternatives, posing a recognisable but new challenge for CSM. But this time, they are no novices anymore. They analysed their core competencies to identify another emerging opportunity – a new exploration in the medical sector, specifically to wound clamping devices. These devices, essential in remote and emergency scenarios like construction sites, mining operations, and battlefields, were in high demand. So again, with further adjustments to their machinery, they started producing metal wound clamps, eventually becoming a key supplier to prominent organisations in defence and healthcare.
The Power of Competence-NPD (New Product Development) Fit
This case is a powerful example of Competence-NPD Fit, where the company’s success does not always lay in finding new markets for existing products because that might not be feasible every time, so the Competence-NPD-Market Fit is about getting one step back and looking for their core competencies and moving forward towards a new Product-Market Fit by aligning their competencies with new market opportunities. Their journey from car seats to body piercing jewellery and then to wound clamping devices showcases the importance of agility and innovation and the importance of looking behind what is obvious.
This article comes as the first case of a series called Competence-NPD Fit: Re-imagining Disrupting Ventures. Every week, we will have one of the cases to show how getting back to the fundamentals could lead to an exceptional journey of Business Transformation.
About the Centre for Business Transformation:
Did you find this case insightful and transformational? Well, this is the day-to-day practice for us in CBIT. We are supporting ventures in their journey to disrupt the industry norms and shifts towards the blue ocean.
The Centre for Business and Industry Transformation (CBIT) embodies an integrated research approach, creating a synergistic blend of industry transformation research, disruptive business practices, and education. The aim is to fuel a continuous learning, innovation, and evolution cycle.
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