Doug Kahn's "ouch" moment arrived in January. In December, the CEO of Ahura Scientific, a developer of hand-held chemical-identification products based in Wilmington, Massachusetts, had presented his board with the plan for 2009. But later that month, revenue looked sparser and the pipeline drier than projected. Standing before the board in the dew of a new year, Kahn told it to scrap the document; instead, he would issue quarterly plans. "In my career, I've never done that before," says Kahn. "I'm accustomed to putting together an exciting plan and coming out of the gates with great enthusiasm. But the uncertainty of the economy wouldn't allow that."
Ahura is an Inc. 500 highflier -- the fastest-growing company in the environmental-services category in 2008. (It's on the list again this year.) We were curious about how last year's class was faring in the economic swoon, so we reached out to the No. 1 companies in each industry category. Growth-company leaders are characterized by ingenuity and resilience -- but they also benefit from momentum. Given that the wind beneath so many wings had been reduced to a puff, we hoped to discover bold gambits and shrewd coping strategies. We were not disappointed.
Ahura has responded to nervous times by reassuring prospects of its continued health -- talking at length about products in development and sometimes sharing its financials with customers. Kahn has also reached down into the ranks for new ideas, creating a council of managers charged with proposing cost-cutting ideas and operational improvements. Among them: removing half the light bulbs from the hallways. "We did that and no one even noticed," says Kahn. "Now we're saving $5,000 a year."
Other 2008 No. 1's staring at parched landscapes have shifted their sights to better-irrigated climes. Gary Lin says growth at his St. Paul—based online advertising firm, Glispa, will hold steady at about 20 percent -- virtually all of that from the company's offices in Germany and Brazil. At Premier Payment Systems, a credit card processing company in Oak Brook, Illinois, sales mirror the economy's peaks and valleys: less business from white-tablecloth restaurants and construction companies, more from pizza joints and what CEO Drew Sementa calls "business opportunity" firms. ("Make money on eBay!")
Some leaders regard slowing growth as a chance to attack their to-do lists. Ralph Gaines, CEO of BeBetter Networks, a Charleston, West Virginia, business that runs corporate health programs, hired a consultant in November to audit technology and operations. The company is exhaustively reworking its IT systems and processes. Gaines estimates the new processes will save BeBetter -- on track for 20 percent growth -- $500,000 a year.
Hammering was audible during a conversation with Greg Bauer and John Hawkins, co-principals of ESC Select, a professional employer organization in Amherst, New York. The company is toppling walls to absorb adjacent office space on which a motivated landlord provided generous terms. The principals are taking advantage of a moderate slowdown -- projected 11 percent revenue growth in 2009 -- to redesign seating arrangements and improve workflow.
Only a couple of the CEOs we spoke to had laid off more than two or three people; a few had added head count; and many had replaced employees as the market for available talent ripened to bursting. "We are looking to take the lowest 10 percent of performers and replace them with stars," says Mike Fitzsimmons, who expects 2009 sales to double at Delivery Agent, a San Francisco company that helps TV networks sell products online. "There's a lot of talent on the street."