REGULATING EMERGING TECHNOLOGIES: PROSPECTIVE SENSEMAKING THROUGH ABSTRACTION AND ELABORATION
Stefan Seidel, Christoph J. Frick, Jan vom Brocke
This study examines how various actors, including legal experts, government officials, and industry leaders, collaborated to create laws for new technologies like blockchain. Through a case study in Liechtenstein, it analyzes the process of developing a law on "trustworthy technology," focusing on how the participants collectively made sense of a complex and evolving subject to construct a new regulatory framework.
Problem
Governments face a significant challenge in regulating emerging digital technologies. They must create rules that prevent harmful effects and protect users without stifling innovation. This is particularly difficult when the full potential and risks of a new technology are not yet clear, creating regulatory gaps and uncertainty for businesses.
Outcome
- Creating effective regulation for new technologies is a process of 'collective prospective sensemaking,' where diverse stakeholders build a shared understanding over time. - This process relies on two interrelated activities: 'abstraction' and 'elaboration'. Abstraction involves generalizing the essential properties of a technology to create flexible, technology-neutral rules that encourage innovation. - Elaboration involves specifying details and requirements to provide legal certainty and protect users. - Through this process, the regulatory target can evolve significantly, as seen in the case study's shift from regulating 'blockchain/cryptocurrency' to a broader, more durable law for the 'token economy' and 'trustworthy technology'.
Host: Welcome to A.I.S. Insights — powered by Living Knowledge. I’m your host, Anna Ivy Summers. Host: On today’s episode, we're diving into the complex world of regulation for new technologies. We’re looking at a study titled "REGULATING EMERGING TECHNOLOGIES: PROSPECTIVE SENSEMAKING THROUGH ABSTRACTION AND ELABORATION". Host: The study examines how a diverse group of people—legal experts, government officials, and industry leaders—came together to create laws for a new technology, using blockchain in Liechtenstein as a case study. Here to help us unpack this is our analyst, Alex Ian Sutherland. Welcome, Alex. Expert: Great to be here, Anna. Host: So Alex, let’s start with the big picture. What is the fundamental problem that governments and businesses face when a new technology like blockchain or A.I. emerges? Expert: It’s a classic case of trying to build the plane while you're flying it. Governments need to create rules to protect users and prevent harm, but they also want to avoid crushing innovation before it even gets off the ground. Host: The dreaded innovation killer. Expert: Exactly. The study highlights that this is incredibly difficult when no one fully understands the technology's potential or its risks. This creates what the authors call a "regulatory gap"—a gray area of uncertainty that can paralyze businesses. They don't know if their new business model is legal, so they hesitate to invest. Host: And how did the researchers in this study go about understanding this process? What was their approach? Expert: They conducted an in-depth case study in the European state of Liechtenstein. They essentially got a front-row seat to the entire law-making process for blockchain technology. Expert: They interviewed everyone involved—from the Prime Minister to tech startup CEOs to the financial regulators. They also analyzed hundreds of documents, including early strategy papers and evolving drafts of the law, to see how the thinking changed over time. Host: It sounds like they had incredible access. So, after all that observation, what were the key findings? What did they discover about how to create good regulation? Expert: The biggest finding is that it's a process of what they call 'collective prospective sensemaking'. That’s a fancy term for getting a diverse group of people in a room to build a shared vision of the future. It’s not about one person having the answer; it’s about creating it together. Host: And the study found this process hinges on two specific activities: 'abstraction' and 'elaboration'. Can you break those down for us? Expert: Of course. Think of 'abstraction' as zooming out. Initially, the group in Liechtenstein was focused on regulating "blockchain" and "cryptocurrency." But they realized that was too specific and would be outdated quickly. Expert: So, they abstracted. They asked, "What is the essential quality of this technology?" They landed on the idea of "trust." This allowed them to create a flexible, technology-neutral rule for any "trustworthy technology," not just blockchain. It future-proofed the law. Host: That’s a brilliant shift. So what about 'elaboration'? Expert: If abstraction is zooming out, 'elaboration' is zooming in. Once they had the big, abstract concept—trustworthy technology—they had to add the specific details. Expert: This meant defining roles, specifying requirements for service providers, and creating rules that would give businesses legal certainty and actually protect users. It's the process of giving the abstract idea real-world teeth. Host: So the target itself evolved dramatically through this process. Expert: It really did. They went from a narrow law about cryptocurrency to a broad, durable framework for what they called the "token economy." This was only possible because of that constant dance between the big-picture abstraction and the fine-detail elaboration. Host: This is fascinating, Alex, but let's get to the bottom line. Why does this study matter for business leaders listening right now, even if they aren't in the crypto space? Expert: This is the most crucial part. The study offers a powerful blueprint for how businesses should approach regulation for any emerging technology, whether it's A.I., quantum computing, or synthetic biology. Expert: The first takeaway is proactive engagement. Don't wait for regulation to happen *to* you. The industry leaders in this study who participated in the process helped shape a more innovation-friendly law. By being at the table, you can influence the outcome. Host: So get involved early and often. What else? Expert: Second, understand the power of language. The breakthrough in Liechtenstein happened when they shifted the conversation from a specific technology, blockchain, to a desired outcome, which was trust. For businesses, this is a key strategy: frame the conversation with regulators around the value you create, not just the tech you use. Host: It’s a narrative strategy, really. Expert: Precisely. And finally, this model provides predictability. The process of abstraction and elaboration creates a stable yet flexible framework. For businesses, that kind of regulatory environment is gold. It reduces uncertainty and gives you the confidence to invest and innovate for the long term. This is the path to avoiding that "gray space" we talked about earlier. Host: So to sum up, regulating new technology isn’t a top-down mandate; it's a collaborative journey. The key is to balance flexible, high-level principles with clear, specific rules. For businesses, the lesson is clear: get a seat at the table and help shape a predictable environment where innovation can thrive. Host: Alex Ian Sutherland, thank you for making such a complex topic so clear. Expert: My pleasure, Anna. Host: And thank you for tuning into A.I.S. Insights — powered by Living Knowledge. Join us next time as we continue to explore the ideas shaping business and technology.
