When Your Business is at Risk of Being Obsolete: How Competence-Based New Product Development Fit is Your Ultimate Solution

Executive Summary

This case study explores how CSM, a prominent UK car seat manufacturer facing obsolescence in a rapidly evolving automotive industry, successfully transformed its business through competence-based new product development. Partnering with Xiaoyu Group, the company conducted a thorough assessment of its core competencies and developed a strategic approach to leverage these strengths in entirely new markets. The result was not just one but two successful transformations: first from car seats to body piercing jewelry, and then from jewelry to medical devices. This remarkable journey demonstrates how a company can continuously reinvent itself when markets become "red oceans" by focusing on core competencies rather than products, creating new revenue streams and establishing itself as a master of strategic agility.

Problem: How Offshoring and Red Oceans Threatened a Market Leader

CSM, a long-established UK manufacturer of car seats, had built its reputation on precision, durability, and high standards—supplying to premium automotive clients such as Ford andJaguar Land Rover. For years, they were a quiet success story in British manufacturing.

But the global landscape shifted dramatically:

• Offshoring pressure: Production of automotive parts was rapidly relocated to lower-cost countries like China and Malaysia.
• Market collapse: The core market for car seats in the UK all but disappeared, with 80% of their revenue at risk.
• Predictable pivots: Like many in their industry, CSM initially attempted to diversify into adjacent products—furniture, office chairs, even luxury seating. But these were red oceans—crowded, competitive, and destined for commodification.

"We didn't just lose customers. We lost the reason our factory existed."— Michael Roberts, CEO, CSM

Solution: A Competence-Led Transformation, Enabled by Xiaoyu Group

Xiaoyu Group was brought in to redefine the company's business model, not just its product line. Using our Business Transformation Platform, we guided CSM through a multi-phase process built on deep strategic reassessment:

Phase 1: Core Competency Mapping

We helped CSM stop thinking in terms of products—and start thinking in terms of capabilities:

• Precision CNC machining
• Metal polishing and finishing
• Fine-tolerance forming and cutting
• Rapid retooling and small-batch agility

Instead of asking "What else can we sell?", we encouraged them to ask:

"What are we uniquely equipped to make, regardless of industry?"

Transformation #1: From Car Seats to Body Piercing Jewelry

With Xiaoyu Group's support, CSM implemented their first major transformation:

• Identified body piercing jewelry as a precision metal market with growing global demand and low entry barriers for manufacturers with exacting standards.
• Leveraged existing machines with minimal upgrades to produce surgical-grade nose studs, earrings, and rings.
• Connected with distribution partners in Europe and North America through Xiaoyu Group's network.
• Developed a new brand identity for a younger, lifestyle-focused audience.

Results of First Transformation

• Within 5 years, CSM became the #1 UK exporter of body piercing jewelry, operating profitably in an entirely new market vertical.
• Retained 85% of their skilled workforce by retraining them for the new product line.
• Increased profit margins by 32% compared to their automotive business.
• Established new intellectual property around specialized metal finishing techniques.

Transformation #2: From Jewelry to Emergency Medical Devices

A decade later, CSM once again faced saturation—this time in the jewelry market, flooded by low-cost imports. Having institutionalized Xiaoyu Group's transformation model, they were ready for a second pivot:

• With our continued partnership, they pivoted toward the medical sector, using their competencies to develop:
  • Wound clamping devices for field use
  • Rapid-closure surgical clips
  • Single-use metal instruments for high-risk environments
• Xiaoyu Group supported this second shift with:
  • Regulatory strategy and CE compliance expertise
  • New product development support through prototyping and certification
  • Business model redesign to serve healthcare, defense, and humanitarian markets

Results of Second Transformation

• CSM became a trusted supplier of emergency medical devices to clients in defense, construction, mining, and mobile hospitals.
• Secured long-term contracts with defense ministries and international aid organizations.
• Achieved 45% higher margins than their jewelry business.
• Created 45 new specialized jobs across the organization.
• Developed patentable innovations in medical device design.

How Xiaoyu Group Helped

Xiaoyu Group provided the strategic infrastructure that powered each transformation:

Key Learnings

This case study demonstrates how companies facing obsolescence can transform through competence-based innovation. Key learnings include:

• Strategic Agility as a Core Capability: Thanks to Xiaoyu Group's Business Transformation Platform, CSM now operates as a nimble, future-proof enterprise capable of escaping commoditized markets repeatedly.
• Competence-Centric Approach: Focusing on core competencies rather than specific products enables manufacturers to pivot into new applications and markets, increasing resilience.
• Red Ocean Detection: Developing the ability to recognize when a market is becoming a "red ocean" and proactively seek new applications for core competencies is essential for long-term survival.
• Transformation as Strategy: In today's rapidly changing business environment, the ability to transform is not just a response to crisis but a strategic advantage.
• Platform-Enabled Change: Using a structured platform approach to transformation makes change manageable, repeatable, and less disruptive to operations.

"When we realized our traditional car seat business was at risk, we initially panicked. The Competence-Based NPD Fit approach from Xiaoyu Group helped us see that our real value wasn't in what we made, but in how we made it. By focusing on our core competencies, we found new opportunities in body piercing jewelry. Then, when that market became saturated, we were able to pivot again into medical devices. This continuous transformation approach has become our competitive advantage - we now know how to reinvent ourselves whenever a market turns into a red ocean."— Michael Roberts, CEO, CSM

Long-term Impact

Four years after implementing the second transformation, CSM continues to thrive:

• The company has established itself as a market leader in specialized medical devices
• Revenue has grown by 65% compared to their peak as a car seat manufacturer
• The company has developed a formalized process for continuous competency assessment and "red ocean detection"
• CSM has become a case study in business resilience and strategic agility, featured in business schools
• The company is now exploring a third transformation into advanced wearable medical technology, anticipating future market saturation

This case demonstrates that with the right strategic approach and platform support from Xiaoyu Group, companies facing obsolescence can not only survive but thrive by understanding and leveraging their core competencies to enter entirely new markets, and continuously transform whenever markets become saturated or highly competitive.