Japan's large corporations have a well-deserved reputation for aggressiveness in gathering competitive technology information worldwide. Until recently, however, this information-gathering was seen as a mere technology-seed search to beat Japanese rivals to licensing-in opportunities, or to catch up to technology overseas. For example, there is a major Japanese pharmaceutical company with big sales in drugs for senile dementia and osteoporosis--the largest areas of profit and growth in the Japanese pharmaceutical market. Matching its search with forecasts of disease patterns in these areas, this company looked for technology seeds, and found new and appropriate chemical entities in Hungary. Politics had kept Japan's rivals away from this promising source in the then Communist bloc. However, in many industries, the Japanese are steadily changing from imitation to innovation. Real inventions are in the offing. In keeping with this switch, the intense global R&D competition that is emerging will require companies to adopt a more integrated style of information gathering. The search for technology information must be more closely joined to competitive intelligence (CI) activities for R&D. Bird-dogging the Competition The Japanese are already out in front in this respect. Their leadership rests on a tradition of well-trained, self-disciplined, and aggressive employees who bird-dog the competition. Leading high-tech companies in the United States and the European community are well-warned that they may find themselves left at the gate if they delay response to well-focused R&D challenges from Japan. The only effective response is to devise a comparable CI system. Competitive intelligence is fully developed as part of the R&D decision process in leading Japanese firms. In their corporate pep talks, top executives emphasize that CI activities--fully exploited beyond R&D consideration--will be a key to seizing the initiative in a complete range of business activities. These executives preach this gospel wisely, because they have learned that high-tech businesses decline when CI activities get lazy. A prime example involved a manufacturer in the semiconductor D-RAM business. In 1985, Tokyo's leading daily newspaper reported that the company had decided to drop out of the 64k D-RAM market. Few competitors bothered to note this event at the time, because of this manufacturer's small and shrinking market share. But the motive behind the withdrawal was revealed in published reports (which not many competitors bothered to review). This company was switching its R&D efforts very aggressively to the next-generation 256k-bit D-RAM, a decision that assured the company of a much lower yield because of the greatly advanced technologies that were necessary. But the goal was the next generation after that--1M-bit D-RAM. This far-sighted company ploughed Y200 billion and 1200 additional researchers/engineers into this project and came out way ahead of the competition, with half the 1M D-RAM market. This company is now known as the champion of 1M D-RAM because its yield ratio, a critical factor in profit, is estimated at double the level of its competitors. CI is becoming crucial for R&D decision-making. As demonstrated by the D-RAM story, a lack of attention to trend-setting competitors can ruin a promising business. A company's alertness must apply not only to internal industry rivalries, but also to new entrants, substitutes, and bargaining power among suppliers and buyers--as pointed out by Michael Porter(1). Spurred by the famous Japanese success in achieving VCR manufacturing dominance, Japanese companies have applied major CI efforts to the anticipation of customer expectations. Because Japanese manufacturers dominated the world VCR market, Japanese videotape makers tapped key information sources on requirements for videotape quality overseas, matched these with VCR specification trends, and surpassed Western companies that had been--until then--the videotape technology leaders. …