Shall we step back from Law Land for a moment to gain (one can hope) a wider perspective?

The Fortune 500 is another Granddaddy of lists, and it’s conceptually a near twin of the AmLaw 200, ranking US-based corporations by total annual revenue. Here are the top ten firms as of the 2014 list:

1. Wal-Mart
2. Exxon Mobil
3. Chevron
4. Berkshire Hathaway
5. Apple
6. Phillips 66
7. GM
8. Ford
9. GE
10. Valero Energy

I submit this tells you vastly more about the overall composition of our macroeconomy than it does about the business models, strategic acuity, or operational excellence of the companies on the list. It tells you (for example) that the energy and automotive sectors are big, as is mass-market retailing and high tech.

I suspect you are less than shocked at that late-breaking news.

Similarly, the AmLaw 100 would tell you that large firms with a global footprint tend to have more revenue than regional or more focussed firms—this is already sounding tautological, isn’t it? It does not provide a clue as to whether the Super Rich strategy trumps the “everywhere all the time” strategy or how that compares in turn to the “we know our niche and we’re stickin’ to it” or the “deer in the headlights/wake me when it’s over” strategy—any more than the Wal-Mart/Exxon gold/silver finish tells you whether Wal-Mart would be a better massively integrated petroleum producer than Exxon or Exxon would be a better massively integrated retailer than Wal-Mart. To pose the hypothetical is to expose its transparent absurdity.

In other words, the AmLaw 100 can provide us a one-dimensional data series, period: An irresistibly fascinating one to pore over, to be sure, but ultimately uninformative about the firms’ relative performance as against their chosen strategy. Different strategies will drive firms to intrinsically different band positions.

Consider Gladwell’s example of two of the measures US News incorporates in its college quality rankings: One is “student selectivity,” and another is “graduation rate performance.” Selectivity is self-explanatory; in the most recently published statistics, Stanford was #1, accepting only 5.7% of applicants. (For those of you keeping score at home, Harvard was #2 at 5.8%, Columbia and Yale tied for #3 at 6.9%, and Princeton came in #5 at 7.4%.)

“Graduation rate performance” measures how a college’s actual graduation rate compares with the predicted rate given socioeconomic status and test scores of its incoming freshman class. Think of it as a measure of the school’s effectiveness. Penn State, for example (appealing to students from a very wide range of backgrounds with a high “standard deviation” of resources available to them when they were growing up), had an expected graduation rate of 73% but an actual rate of 85%: Admirable. Yale, by contrast, admitting student all-stars, had a projected rate of 96%, meaning the highest its score could possibly be on this measure was +4 (it was actually +2).

Both statistics—selectivity and “efficacy”—are important, but compiling a ranking requires the compiler to choose weights. US News weights selectivity twice as important as efficacy which prompted Graham Spanier, president of Penn State at the time of Gladwell’s article, to say:

“If you look at the top twenty schools every year, forever, they are all wealthy private universities. […] Do you mean that even the most prestigious public universities in the United States, and you can take your pick of what you think they are—Berkeley, U.C.L.A., University of Michigan, University of Wisconsin, Illinois, Penn State, U.N.C.—do you mean to say that not one of those is in the top tier of institutions? It doesn’t really make sense, until you drill down into the rankings, and what do you find? What I find more than anything else is a measure of wealth: institutional wealth, how big is your endowment, what percentage of alumni are donating each year, what are your faculty salaries, how much are you spending per student. Penn State may very well be the most popular university in America—we get a hundred and fifteen thousand applications a year for admission. We serve a lot of people. Nearly a third of them are the first people in their entire family network to come to college. We have seventy-six per cent of our students receiving financial aid. There is no possibility that we could do anything here at this university to get ourselves into the top ten or twenty or thirty—except if some donor gave us billions of dollars.”

Now we’re approaching the nub of the problem.