I recently found myself reading about the history of Cabbage Patch Kids, as it was a famous doll when I was a kid and wanted to learn more. Kudos to the beauty of curiosity. One minute you’re reading about business, and the next you’re learning how a doll with a name, a birth certificate, and an adoption story became one of the biggest toy phenomena of the 1980s.
Let’s dissect this for a second. Someone took a stuffed doll, gave it a personality, convinced people they weren’t buying it but adopting it, and created an extraordinary commercial success. Meanwhile, the rest of us are sitting in meetings discussing increasingly sophisticated business models, market valuations, and growth strategies, wondering where the next great opportunity might be hiding.
It got me thinking about McDonald’s as well. The McDonald brothers didn’t invent hamburgers, and Ray Kroc didn’t invent fast food. What they recognized was the potential of a simple concept supported by an operating model that could be repeated at scale. The product was ordinary, but the business behind it became extraordinary.
And suddenly, I started wondering whether we sometimes make finding the next great business opportunity more complicated than it needs to be.
Consider Spanx, which began with a relatively straightforward solution to an everyday clothing problem, or Crocs, which turned an unusual-looking foam shoe into a globally recognized product. Then there’s Liquid Death, which managed to make canned water interesting in a market where the underlying product is, quite literally, water.
None of these businesses succeeded simply because their ideas were simple. Their success depended on understanding customers, creating differentiation, developing distribution, and building capabilities that competitors couldn’t easily reproduce. In some cases, branding transformed an ordinary product into something consumers felt connected to. In others, operational discipline and a repeatable business model made expansion possible.
What fascinates me is that the simplicity of the original idea can make the opportunity easy to underestimate. A doll is just a doll until it becomes a cultural phenomenon. A hamburger is just a hamburger until someone figures out how to sell millions of them consistently. And apparently, water is just water until someone gives it a rather aggressive personality. The real innovation isn’t always the product. Sometimes it’s the business built around it.
I’ve been thinking about this in the context of M&A, particularly as deal flow has felt quieter recently. When fewer attractive opportunities are coming to market, the natural response is to spend more time searching for businesses that meet established acquisition criteria.
But what if the opportunity isn’t necessarily in finding more companies that are already for sale? What if it’s in identifying businesses that haven’t yet recognized their own potential?
There are countless smaller businesses with loyal customers, proven products, and strong reputations that may never appear on a conventional acquisition shortlist. Perhaps the founder has built something successful but lacks the capital, distribution, technology, or organizational infrastructure to take it further. Perhaps the business has grown organically for years without anyone seriously considering what it could become under a different ownership or operating model.
These businesses may not have particularly sophisticated presentations or ambitious expansion strategies. Some may not even think of themselves as acquisition candidates. Yet beneath an ordinary product or service could be a business with the potential to scale considerably beyond its current footprint.
Of course, not every local success story is the next McDonald’s. Some businesses work precisely because of their location, founder relationships, or niche customer base. Others benefit from trends that may disappear as quickly as they emerged. The challenge is distinguishing between a business that is simply doing well and one whose success can be reproduced.
This is where I think the conversation becomes particularly relevant to acquirers. Identifying an overlooked business is only the beginning. The more important question is whether the buyer possesses the capabilities needed to unlock its potential. Can the business expand into new markets without losing what customers value? Can its operating model be replicated? Can distribution improve without compromising quality? Can the organization grow beyond its dependence on the founder?
An acquirer might see an opportunity to introduce stronger systems, professionalize operations, expand distribution, or develop new channels. But these improvements create value only if they strengthen the business rather than burying its original appeal beneath layers of corporate sophistication.
We’ve all seen situations where an organization acquires something special and then proceeds to standardize away the very qualities that made it attractive. It’s a remarkably efficient way to spend money making a business less interesting.
The best opportunities may therefore require more than financial capital. They require judgment about what should change, what should remain untouched, and how to build the organizational capabilities necessary for sustainable growth.
I don’t think the lesson from Cabbage Patch Kids or McDonald’s is that we should all start looking for the next billion-dollar doll or hamburger. Extraordinary outcomes are rare, and hindsight has a wonderful way of making success look inevitable. But these stories do raise an interesting question about how we recognize value. Are we placing too much emphasis on businesses that already look sophisticated, while overlooking simpler companies with strong customer demand and untapped potential?
When deal flow slows, perhaps the answer isn’t always to compete harder for the same opportunities. Maybe it’s to become more curious about businesses that aren’t actively looking for buyers, to understand what makes them successful, and to consider whether the right partnership or acquisition could help them become something considerably larger. After all, some of the world’s most recognizable businesses began with ideas that would have sounded almost laughably ordinary in a boardroom.
And I can’t help wondering how many extraordinary businesses are sitting in plain sight today, waiting for someone to recognize that the opportunity isn’t necessarily in what they sell, but in what they could become.
