How did Mike Peterson help to bring the Internet to the dashboard at GM? How else: by breaking the rules.

Back in 1996, Milal Peterson and several project managers at General Motors were handed what must have seemed like Mission Impossible: build a system that would bring the Internet into the automobile, make it accessible to a driver through just a few buttons and a speaker— and get it all done within a sprawling bureaucracy, where innovation typically moves at about the same pace as continental drift.

That fledgling project, called OnStar, not only performs basically as promised today but also has become athrivingGM business unit, with 400 employees arid some impressive bottom-line numbers. OnStar has nearly 2 million paid subscribers (GM says it expects that number to hit4 million in two years), and GM officials recently disclosed that OnStar would turn its first profit sometime in 2003. The company has even started to• license the system to Subaru, Honda, Toyota, and Audi. And a good deal of the credit for this success goes to Peterson, 44, who introduced and developed OnStar’s centerpiece feature, the Virtual Advisor, which delivers customized Web content into the car through voice recognition software that reads it to the driver.

Voice recognition systems even today are famously clunky and unreliable; making one work in a noisy car was a small miracle. Two of the chief engineering challenges were to “purify” voice commands from inside the car by stripping out as much background noise as possible and to “tune” the software to improve its ability to recognize a driver’s words. (Virtual Advisor understands not just “yes” but “uh-huh,”“yeah,” and “yup.”)To get them done, Peterson cobbled together talent that GM simply didn’t have. Not only did he immediately hire from outside the company—a practice that’s frowned on in most GM divisions—but he also quickly found the right technology partners, including Lucent, an IBM division in North Carolina, and three Silicon Valley startups (General Magic, Nuance Communications, and Speech- Works International).

Peterson’s real coup, though, was teaming up with OnStar chief Chet Huber in persuading GM CEO Rick Wagoner in December1999 to cough up $15 million for a formal alliance with General Magic, which makes the software that allows drivers to “talk” to the OnStar computer network. An alpha version of the VirtualAdvisor was up and running by June 2000; the first customers received access to it that December, a month ahead of its official launch.

The irony of Peterson’s triumph? None of it would have happened if he had managed by the GM book. “My bosses would ask me, ‘How many rules did you break today?” Peterson says. “But I prefer to think of it as working on the edge.”