How our ranking system was born | Letter from the business editor

Starbucks — Seattle's iconic coffee company — tops The Seattle Times' 20th annual ranking of publicly traded companies. It joins the list of winners that started with Microsoft, another company strongly identified with our region, which set the standard for outstanding performance in the 1990s.

Lots of newspapers and magazines were creating their own ranking systems back then using straightforward measures of successes, such as market capitalization, annual sales or profit.

Times reporter Greg Heberlein decided he wanted to take a different approach. After consulting a handful of stock analysts around town, he devised his own secret sauce.

"We couldn't tell anyone what to invest in, but we could give them data to help them decide what to invest in," Heberlein says. "We would tell investors to not buy stock based on the rankings, but to consider those stocks that do well and use the data to help them decide which companies have the best prospects."

To give even the smallest companies a shot at rising to the top, he weighted the results with return on equity becoming the most important factor.

"It was really neat that Microsoft had won that first year because it was such a highly visible company in those early years. It had only been public for four or five years," he says.

While our methodology has changed little since 1992, how we compile the data has.

"We started from scratch," recalls Heberlein, who retired from The Times in 2001. "We collected every number that we put in the section — we figured that to be more than 8,000 numbers — and entered them manually into a Lotus 1-2-3 spreadsheet."

Now we download data from a Bloomberg terminal into an Excel spreadsheet in a matter of hours instead of weeks. And the print edition in your hands is now supplemented online at seattletimes.com, where you can compare data and sort according to a variety of metrics.

Heberlein continues to consult the annual rankings as he makes his own stock picks. "If I were to rank the things that I did in my career, establishing the Northwest 100 was just colossal in terms of my work," he says. He gave a special shout out to graphic artist Bo Hok Cline for the attractive look of the original section, which is still fairly comparable to today's edition.

Heberlein's thoughts on how Starbucks topped the chart this year?

"It never stops innovating. They are adding new drinks and new products all the time."