A butterfly flaps its wings in China,

and sometime later a thunderstorm drenches Chicago.

We’ve all heard some variation of that description -- of how one event can contribute to seemingly unrelated event through a series of exquisitely intricate interactions.

This old proverb can apply directly to the way our world works – the way every person, business, government, natural system, and man-made system interacts.

Intelligence is no longer the domain of individual inventors, laboring for years in isolation, and then bringing out their inventions for the rest of the world to apply.

It happens faster now, and diffuses much more rapidly into our everyday lives.

It’s open, multidisciplinary and inherently collaborative -- taking place across communities and among millions of people we will never meet.

Now, the list of problems we face is well-known: A financial crisis; climate disruption; energy geopolitics; food supply hazards.

What they show is that we're all connected, today like never before: economically, socially and technologically.Like the butterfly flapping its wings, when a crisis occurs on one part of the planet, it can bring problems to another part, within days or even hours.

For example, consider how gridlocked our cities are: traffic congestion in the United States costs $78 billion a year. That’s 4.2 billion lost hours and 2.9 billion gallons of wasted gasoline – and that’s not even counting the impact on our air quality.

Consider how inefficient our supply chains are: Consumer product and retail industries lose about $40 billion a year due to supply chain inefficiencies. That lost money could be put to better use.

Consider how our planet’s water supply is drying up: water use has risen at twice the rate of population growth, or sixfold, since the 1900s, while half the world’s people lack adequate sanitation.

And consider how antiquated our healthcare system is: In truth, it isn’t a “system” at all. It doesn’t link from diagnosis, to drug discovery, to healthcare deliverers, to insurers, to employers. Meanwhile, personal expenditures on health now push more than 100 million people worldwide below the poverty line each year.

So we're headed for a wall at breakneck speed. And every day that we don't address the problems facing our society is another day closer to squandering the future instead of winning it.

But there’s good news.

The systems and technologies that underpin so much of how the world works are becoming smarter.

We live in a time of unprecedented advances in every sector of human endeavor. New advances bring new ideas, which can have a profound and positive impact on our planet.

In the IT industry alone, we’re seeing the coming of age of a whole new generation of intelligent systems and technologies -- more powerful and accessible than ever before.

In the same way that the Hubble telescope changed 400 years of thinking about the physical universe, today the infusion of intelligence into society’s systems will change the way the world literally works.

These systems and processes enable physical goods to be developed, manufactured, bought and sold; services to be delivered; everything from people and money to oil, water and electrons to move; and billions of people to work and live.

Three things have brought this about. First, the world is becoming instrumented. Imagine, if you can, a billion transistors for every human being. We're almost there. Sensors are being embedded everywhere: in cars, appliances, cameras, roads, pipelines…even in medicine and livestock.

Second, the world is becoming interconnected – 1.2 billion people, millions of businesses and perhaps a trillion devices access the World Wide Web today. And by 2011, it is estimated that the Internet will reach 2 billion people, or nearly one-third of the population.

And with computational power now being put into things we wouldn't recognize as computers, any person, any object, any process or service and any organization—large or small—can become digitally aware, connected and smart. Think of a trillion connected and intelligent things, and the oceans of data they will produce.

Third, all of those instrumented and interconnected things are becoming intelligent. This means they can link to powerful new backend systems that can process all that data, and to advanced analytics capable of turning it into real insight, in real time.

These new ways to work and think generate not just new products, but industries, not just new knowledge, but new ways of working together.

What wasn’t visible before is becoming visible for the first time, and this will change the conventional wisdom about our planet’s infrastructure forever.

Picture a smarter global food system that uses clever RFID tags to trace meat and poultry from the farm through the supply chain to the store shelf – eradicating spoilage and waste.

Picture a pharmaceutical company using grid computing and data mining to analyze large amounts of information to help doctors make better diagnoses and treatment decisions, develop new drugs, and predict health issues before they happen – by crunching data in days and weeks instead of months and years.

Picture home appliances equipped with automation software and advanced analytical tools that are smart enough to tell you how efficiently they are running, shut themselves off when energy use peaks, or perform diagnostic tests without you having to call a repair person.

Picture an innovative, high-tech computing system that cured traffic gridlock in Stockholm Sweden by directly identifying and charging vehicles depending on the time of day – higher during peak times, lower during off peak hours.

Oil exploration, earthquake prediction, water management – even the search for alien life in the universe – have begun to use smart systems to find the big answers to the big questions.

The success of projects like these signals the coming of age

for a whole new generation of technologies -- more powerful

and accessible than ever before.

But as with any intelligent system, you need more than just cutting-edge technology to be successful. You need to analyze how things flow,

how people interact,

how processes can be more productive and human,

and then bring together the abundance of technologies, skills, approaches and capabilities that makes true innovation possible.

We live in a complex universe. Throughout human history we've attempted to illuminate those complexities – to explain them, predict where they will lead us, and search for ways to use them.

Will we ever know which butterfly caused which storm? Or what's out there waiting for us among the stars?

With all of these smart technologies and systems at hand, we have a chance to journey into uncharted terrain, to experiment, be more creative, rethink assumptions,

and stretch our limits as far as the mind can

imagine.

Click on image for the narrated YouTube version: