James Heppelmann is the CEO of software company PTC.
I probably would put the biggest risks in three buckets.  The first risk is that I do nothing and somebody leapfrogs me. That’s a big problem, and we’ve seen a few examples that have been pretty dramatic.
 The second risk is that I do something and it doesn’t work. I overestimated the capabilities of my internal engineering and IT departments. I invested a lot of money, and it didn’t really produce a successful product. It didn’t scale, it didn’t perform, it didn’t work.
 And the third risk is the risk of unintended consequences. I built something. I began to collect data. That data got hacked and compromised. We’ve all seen examples—when credit-card numbers get stolen and so forth. The company who gets blamed actually was a victim, but the customers say, “I’m still going to blame you because if you’re going to take that type of information from me, then you have a duty to protect it, and you failed in that duty.”
The mitigation for not doing anything and for being leapfrogged is that you need to move forward with a strategy and a technology investigation and a prototype and then plan what you are going to do. And I’d say if you’re not already doing that, you’re already vulnerable because a lot of companies are deep into that process for sure.
On the risk of doing something and it doesn’t work, it’s like any other big, new-product project you’re trying to do. You have to make sure that you actually have the capabilities to do this and that you understand how you’ll create value by doing it.
And on the third item—unintended consequences, particularly around security and availability—I think you need to find some good outside partners. Because, to be frank, most manufacturing companies are not really in a position internally to solve these problems.Reference: How the Internet of Things could transform the value chain.
Taking advantage of the Internet of Things for your business, and thus creating smarter products, processes and tools, is, from my point of view, a second step. The first being à la The Core Algorithm is begin with the end in mind. What is it that you're trying to accomplish for your business, and what are challenges, obstacles or threats to you're doing so? Being as crystal clear as possible on your aims and purpose will help you identify risks accordingly and manage them effectively.