(FORTUNE Magazine) – COMPETITION/Cover Story 42 WHERE JAPAN WILL STRIKE NEXT Loaded with cash and eager to head off fire-breathing challenges from Korea and other growing Asian dragons, the folks who brought you the Walkman, the VCR, and the Honda are readying a sunburst of new products and services. Among them: tape recorders the size of a matchbox and flat TV screens that you can hang on walls. The Japanese will go after new business where they have only beachheads or no presence at all -- even hamburgers in Honolulu. Rivals beware. by Gene Bylinsky

52 A JAPANESE VIEW: WHY AMERICA HAS FALLEN BEHIND Sony's Akio Morita asserts that the U.S. has forgotten how to innovate and has effectively opted out of manufacturing.

EXECUTIVE LIFE 57 NEW TRUTHS ABOUT STAYING HEALTHY In a field where myths and misinformation about food, exercise, and stress abound in lethal doses, scientists are uncovering solid insights on how to live well longer. Avoiding the most common killers is largely up to you. by Brian O'Reilly

AUTOS 71 THE METHANOL CAR IN YOUR FUTURE With President Bush urging them on, the automakers are hard at work on a vehicle that will run cleaner -- and accelerate faster -- than one fueled with gasoline. by Andrew Kupfer

DYNASTIES 86 THE BROWNS OF LOUISVILLE: KEEPING IT ALL IN THE FAMILY For 119 years, they have run distiller Brown-Forman. Their secret? Meritocratic nepotism, dogged consistency, and premium brands like Jack Daniel's. by Brett Duval Fromson

CORPORATE PERFORMANCE 96 COMPANIES TO WATCH Hartford Steam Boiler, Oneida, Synoptics Communications, and Marietta.

TECHNOLOGY 100 HOW TO BREAK THE SOFTWARE LOGJAM Programming takes longer -- and costs more -- than most computer users expect. Don't count on a high-tech fix. Smarter management can unclog the bottlenecks. by Brenton R. Schlender

MANAGING 116 TURNING AROUND THE LORD'S BUSINESS Mainline churches are losing members, but smart pastors know how to call home the wandering lambs. Words familiar in boardrooms -- market research, customer satisfaction -- resound in pastoral offices. A look at success in the religious world reveals a great deal about managing in the secular. by Thomas A. Stewart

LITIGATION 133 THE CASE AGAINST EXPERT WITNESSES Want to win a lawsuit? Just call an all-purpose expert. For a fee, you can find one to ''prove'' almost anything. Swearing that a product was misdesigned, self-styled accidentologists often make a big hit with juries. But judges are starting to rebel. by Walter Olson

MONEY & MARKETS 141 THE FOOLISH RUSH TO ESOPS Turning the workers into owners has long seemed like a terrific idea, and companies threatened by takeover have lately seized on ESOPs as a raider repellent. But the outside shareholders, the company, and the employees themselves can suffer in the long term. by Sylvia Nasar

BOOK EXCERPT 155 HOW HARLEY BEAT BACK THE JAPANESE Quality was awful, manufacturing a mess, and the Japanese were gobbling market share. The managers who bought the company pulled off one of America's most celebrated turnarounds.

DEPARTMENTS 4 EDITOR'S DESK 6 INDEX 8 NEWS/TRENDS The future of space exploration funding, how Disney will reap megaprofits from the Muppets, the zoom in corporate jet sales, and more.

17 FORTUNE FORECAST/CEO POLL The seven-year boom has at least another year before it busts, say top executives. by Faye Rice

25 PERSONAL INVESTING A primer on new wrinkles in an old standby: life insurance. by Terence P. Pare Also: J.C. Penney's new shine, storm shelter stocks, and Portfolio Talk with Russell Thompson of United Income Fund.

225 FORTUNE PEOPLE Leonard Stern vs. Donald Trump, a nonfamily boss for Wang Labs, and more. by Mark Alpert

226 ON THE RISE

229 LETTERS TO FORTUNE Bouquets and brickbats for the second wives of CEOs, Jaguar vs. Lexus, and more.

233 BOOKS AND IDEAS A top auto analyst chronicles General Motors' efforts to turn itself around. by Alex Taylor III

245 OTHER VOICES It's time for judges to admit how often they make social policy, says a law school professor.

251 KEEPING UP by Daniel Seligman

ABOVE: A demonstration of Hitachi's high-definition TV screens, photographed in Yokohama by Robert Wallis -- Sipa

COVER: Sony's Akio Morita holding a Mavica MVC-C1 electronic still camera, photographed by Caroline Parsons