(FORTUNE Magazine) – ''We will beat the Japanese every time.'' So says Bell Atlantic Chief Executive Raymond W. Smith. That's strong talk from the head of a company that, like the other Baby Bells, is fighting slow growth in its core telephone business and looking for new markets overseas, where Japan competes. Smith, 54, thinks all of U.S. industry will prevail against Japan. His contrarian view: Japan's homogeneous work force, far from being the competitive edge that many proclaim, is an Achilles' heel. By contrast, he says, the diversity of America's labor pool is the key to beating the competition, provided U.S. education improves. Says Smith: ''If you take a roomful of Carnegie-Mellon engineers like me, you're going to get a particular slant on solutions. But with a diverse group in terms of race, age, and sex, you'll get a much better array of options.'' The Bell Atlantic CEO overestimates his own homogeneity: He writes plays, one of which, The Fetal Pig, a comedy, was produced in Philadelphia, Bell Atlantic's home town, in 1987. Japan isn't the Baby Bells' only competitor. The cellular phone business, where real growth potential lies, is a jungle. Bell Atlantic has made a $2.5 billion offer for Metro Mobile, a New York City cellular company. But it must contend with a national cellular network just announced by McCaw Cellular Communications. Happier news for the Baby Bells: an FCC proposal that they be allowed to carry TV programming to homes. That would put them in competition with cable companies.