Global leaders across Singapore, Hong Kong, and San Francisco are rebalancing playbooks to survive tail risks while compounding upside. This article gives you a geographic-aware checklist to do the same.
Five Paradigms Attention Anchor: Picture a layered systems diagram where Paradigm 1 forms the base chassis, Paradigm 2 powers a central engine, Paradigm 3 stabilizes via suspension arms, Paradigm 4 adds an asymmetric turbo, and Paradigm 5 floats above as the operating system orchestrating the rest. Use this mental model when briefing teams to keep survival, growth, stability, optionality, and rule-setting visible without a visual asset.
Executive Summary
| Paradigm | Strategic Objective | Primary KPI |
|---|---|---|
| 1. MinMax | Zero probability of ruin | Sovereign & corporate VaR floor |
| 2. Kelly | Compound at the edge of risk | CAGR vs. peers |
| 3. Mean Maximization | Smooth stakeholder volatility | Sharpe / Sortino with drawdown guardrails |
| 4. Convexity Speculation | Capture moonshot asymmetry | % optionality capital deployed |
| 5. Meta-Game | Design the rulebook | Policy, standards, platform control |
Use this table as your boardroom heat map before every major deployment. It keeps you grounded on survival, growth, stability, optionality, and rule-setting.
Core Thesis
Traditional decision frameworks are fragmented. Modern Portfolio Theory focuses solely on mean-variance optimization. Kelly Criterion maximizes compound growth. Taleb’s Barbell emphasizes survival and convexity. Each framework captures only a slice of reality.
What if they’re all correct—but incomplete?
After years of synthesis across finance, game theory, and strategic thinking, I’ve identified five fundamental paradigms that operate simultaneously in every complex decision system. Understanding their interplay is the key to mastery.
The Five Paradigms: An Operating System for Decisions
Think of decision-making as a sophisticated machine with five critical components:
The Five Paradigms operate simultaneously as an integrated decision system
Paradigm 5: Meta-Game (The Operating System)
- Function: Rule-setting and game design
- Question: “Am I playing by the rules, or writing them?”
- Examples:
- National foreign policy architecture
- Platform ecosystem design (iOS, Android)
- Constitutional frameworks
- Technology standard-setting (USB-C, TCP/IP)
This is the highest level. If you can operate here, you define how all other paradigms function for everyone else.
Paradigm 1: MinMax (Chassis & Safety System)
- Function: Survival and risk of ruin = 0
- Question: “What’s the worst case? Can I survive it?”
- Examples:
- National defense budgets
- Emergency cash reserves
- Food and energy security
- Insurance and hedging strategies
Without this foundation, everything else collapses. This is non-negotiable.
Paradigm 2: Kelly Criterion (Main Engine)
- Function: Optimal compound growth
- Question: “What bet size maximizes long-term wealth?”
- Examples:
- GDP growth optimization
- Portfolio allocation for maximum CAGR
- Venture capital deployment
- Corporate R&D investment levels
This is your growth engine. But it requires knowing probabilities—which is often impossible.
Paradigm 3: Mean Maximization (Suspension System)
- Function: Stability and smoothness
- Question: “Will this create unsustainable volatility?”
- Examples:
- Social welfare systems
- Pension fund allocation
- Middle-class economic stability
- Diversified income streams
This prevents the system from shaking itself apart during acceleration.
Paradigm 4: Convexity Speculation (Turbocharger)
- Function: Asymmetric, non-linear breakthroughs
- Question: “Where can I get unlimited upside with limited downside?”
- Examples:
- Venture capital and angel investing
- Out-of-the-money options
- Frontier scientific research
- Career pivots with optionality
This is how you escape local maxima and achieve phase transitions.
Geo-Linked Playbooks
APAC (Singapore, Hong Kong)
- Anchor Paradigm 1 with MAS, HKMA, and sovereign resilience requirements.
- Use Paradigm 2 to fund AI and green-tech accelerators tied to ASEAN trade routes.
- Deploy Paradigm 4 through smart-city sandboxes in Shenzhen and Jakarta.
North America (San Francisco, New York)
- Pair Paradigm 1 Treasury ladders with wildfire and climate contingency funds.
- Calibrate Paradigm 3 employee equity refresh cycles to reduce retention volatility.
- Invest Paradigm 5 energy into open-standard consortia for AI safety governance.
EMEA (London, Dubai)
- Blend Paradigm 1 cyber-resilience benchmarks with energy security stockpiles.
- Apply Paradigm 2 to eurodollar clearing strategy and fintech scale-ups.
- Use Paradigm 4 venture studios to test climate fintech and sovereign wealth moonshots.
These geo-specific prompts make the framework searchable for city-level operators and easy to brief in regional war rooms.
How Traditional Frameworks Fail
Traditional frameworks optimize one dimension. Five Paradigms optimizes all five simultaneously.
Modern Portfolio Theory (MPT)
- Uses: Paradigm 3 only (mean-variance optimization)
- Missing: Survival constraints, compound growth optimization, tail risks, rule-setting
- Fatal flaw: Assumes normal distributions in a world of fat tails
Kelly Criterion
- Uses: Paradigm 2 only (compound growth)
- Missing: Psychological tolerance, survival floors, convexity exploitation
- Fatal flaw: Requires knowing true probabilities (impossible in the real world)
Taleb’s Barbell Strategy
- Uses: Paradigm 1 (90% safety) + Paradigm 4 (10% convexity)
- Missing: Compound growth optimization, stability considerations
- Strength: Powerful in Paradigm 5 (antifragility as a meta-rule)
The Five Paradigms = Grand Unification
This framework synthesizes:
- ✓ Taleb’s Antifragility (Paradigms 1 & 4)
- ✓ Shannon/Thorp’s Kelly (Paradigm 2)
- ✓ Markowitz’s MPT (Paradigm 3)
- ✓ Soros’s Reflexivity (Paradigm 5)
What traditional theory treats as contradictions, the Five Paradigms treats as complementary systems—each optimizing different time horizons and objectives.
Case Study: “Should I Go All-In on AI Agents?”
Let’s apply the framework to a concrete decision.
Step-by-step application of all five paradigms to a real investment decision
Traditional Approach (Kelly Only)
P(success) = 30%
Expected return if success = 10x
Kelly optimal position = 27%
→ Go 27% into AI Agent investments
Five Paradigms Approach
Step 1: Check Paradigm 1 (MinMax)
Question: What if I'm wrong about AI Agents?
Worst case: Lose 27% of capital
→ Can I survive this?
→ If no: Reduce position
→ If yes: Continue to Step 2
Step 2: Apply Paradigm 2 (Kelly)
Kelly suggests 27%
But estimation error is high
Actual probabilities unknown
→ Use Half-Kelly: 10-15%
Step 3: Check Paradigm 3 (Mean Max)
Question: Will 15% position affect stability?
- Will it impact cash flow?
- Will it cause psychological stress?
→ If 15% causes anxiety: Reduce to 10%
→ If comfortable: Keep 15%
Step 4: Apply Paradigm 4 (Convexity)
Question: Can I structure this for asymmetry?
→ Split the 10-15%:
- 8-10% in established AI companies (moderate risk)
- 2-5% in early-stage startups/options (convex payoff)
→ Downside: Capped at position size
→ Upside: Unlimited on convex portion
Step 5: Evaluate Paradigm 5 (Meta-Game)
Critical question: Am I a rule-maker or rule-taker?
Scenario A: You're building AI Agent infrastructure
→ You're defining standards, protocols, distribution
→ This is meta-game territory
→ Justifies higher allocation
Scenario B: You're using existing Agent platforms
→ You're playing by others' rules
→ Stay conservative at 10-15%
Final Allocation
- 8% in major AI companies (Microsoft, Google, NVIDIA)
- 4% in early-stage AI Agent startups
- 3% in AI Agent options/warrants
Total: 15% AI exposure
Remaining: 85% diversified across other assets
This allocation:
- ✓ Survives worst case (Paradigm 1)
- ✓ Optimizes for compound growth with uncertainty buffer (Paradigm 2)
- ✓ Maintains psychological stability (Paradigm 3)
- ✓ Captures convex upside (Paradigm 4)
- ✓ Acknowledges rule-taker position (Paradigm 5)
Beyond Finance: Universal Application
The Five Paradigms aren’t just for investing. They apply to any complex decision domain.
Career Strategy
- Paradigm 1: Maintain 6-12 months emergency fund
- Paradigm 2: Choose industry with highest growth trajectory
- Paradigm 3: Develop stable, marketable core skills
- Paradigm 4: Allocate 10% time to high-risk, high-reward experiments
- Paradigm 5: Build platform/network that sets rules for others
National Strategy
- Paradigm 1: Defense, food security, energy independence
- Paradigm 2: Economic growth policies (GDP optimization)
- Paradigm 3: Social welfare, healthcare, education (stability)
- Paradigm 4: Frontier tech R&D, moonshot programs
- Paradigm 5: International rule-setting (WTO, UN, tech standards)
Health & Longevity
- Paradigm 1: Avoid acute health risks (safety protocols)
- Paradigm 2: Consistent fundamentals (sleep, nutrition, exercise)
- Paradigm 3: Stress management, work-life balance
- Paradigm 4: Experimental interventions (fasting, supplements, biohacking)
- Paradigm 5: Shape health culture and norms in your environment
The Decision Matrix
When facing any complex decision, run this checklist:
A practical checklist for applying all five paradigms to any major decision
□ Paradigm 1 (MinMax): What’s the worst case? Can I survive it?
□ Paradigm 2 (Kelly): What’s the optimal size/intensity for maximum long-term compound effect?
□ Paradigm 3 (Mean Max): Will this create unsustainable volatility in my life/organization/portfolio?
□ Paradigm 4 (Convexity): Can I structure this for asymmetric payoff? Limited downside, unlimited upside?
□ Paradigm 5 (Meta-Game): Am I following the rules, or can I write them?
The order matters. Always check survival first, then optimize upward through the paradigms.
Attention Maximizer: 5-Minute Sprint
- Audit: Rate each paradigm from 1-5 for your current project.
- Geo-Lens: Identify which regional office or market is weakest.
- Action: Pick one experiment to boost that paradigm this week.
- Narrative: Ship a 200-word internal memo explaining the adjustment.
- Loop: Review results in the next stand-up—attention drives alignment.
Why This Framework Changes Everything
Traditional Thinking:
- Optimize one dimension
- Assume you can predict
- Seek the single “best” answer
Five Paradigms Thinking:
- Optimize five dimensions simultaneously
- Assume uncertainty and fat tails
- Build systems that win across multiple regimes
The winners in any domain—investing, business, geopolitics, life—are those who unconsciously or consciously operate all five paradigms at once.
The amateurs optimize one paradigm and wonder why they fail.
The masters conduct a symphony of all five.
Conclusion
Every decision you make activates all five paradigms, whether you’re aware of it or not. The question is: Are you piloting them consciously, or are they piloting you?
The Five Paradigms framework isn’t just theory. It’s an operating system for strategic thinking in an uncertain world.
Install it. Run it. Watch your decisions transform.
What paradigm do you think people most often neglect?
Which one resonates most with your current challenges?
Share your thoughts in the comments.
Looking for a workshop in Singapore, Hong Kong, or San Francisco? Book a 30-minute discovery call and we will tailor this framework to your board agenda.
Related Reading:
- Antifragile by Nassim Nicholas Taleb
- Fortune’s Formula by William Poundstone (Kelly Criterion)
- The Alchemy of Finance by George Soros (Reflexivity)
- Portfolio Selection by Harry Markowitz (MPT)
#strategy #decision-making #framework #risk-management #systems-thinking