"When things go bad, cut pay at the top first. When things go well, reward at the bottom first."

-- Steve Ashton, CEO of Ashton Photo, in Salem, Oreg.

Competing against big companies just isn't what it used to be, or so we keep hearing from growth-company leaders. Gone are the days when the giants stumbled around like clumsy dinosaurs, easily outmaneuvered by fleet-footed competitors. Rene Apack, the founder of a fast-growing chain of clothing stores, recently told us that in the past four years the price point on the shoes he sells has dropped by almost half, from $100. "Blame it on the Limited and the Gap," he says. Inc. 500 CEO Matt Hession, who sells medical products to community drugstores, is in China looking for low-priced goods that he knows his customers are desperate to have because of the intense competitive pressure they're feeling from Pharmor, Walgreens, and other giant chains. Then there's Ben Narasin of Boston Prepatory, an Inc. 500 apparel company whose "big shirt" was a big hit last year -- until the Limited copied it. "Staying one step ahead of large competitors is no guarantee of success," says Narasin. "It's more a matter of survival."

* * *