Level 5 Leadership: Humility + Will Level 5 Leadership: Humility + Will Based on Jim Collins article, “Level 5 Leadership: The Triumph of Humility and Fierce Resolve”, in Best Of HBR, HBR, July-August, 2005, p.136-146 The key to an organization becoming great is having a Level 5 leader The key to an organization becoming great is having a Level 5 leader Someone who blends genuine personal humility with intense professional will Someone who blends genuine personal humility with intense professional will “Level 5”“Level 5” The highest level in a hierarchy of leadership capabilities Leaders at the other four levels in the hierarchy can produce high levels of success but not enough to elevate organizations from mediocrity to sustained excellence Good-to-great transformations don’t happen without Level 5 leadership Level 5 is not the only requirement for transforming a good organization into a great one Other factors include getting the right people on the bus (and the wrong people off the bus) and creating a culture of discipline The highest level in a hierarchy of leadership capabilities Leaders at the other four levels in the hierarchy can produce high levels of success but not enough to elevate organizations from mediocrity to sustained excellence Good-to-great transformations don’t happen without Level 5 leadership Level 5 is not the only requirement for transforming a good organization into a great one Other factors include getting the right people on the bus (and the wrong people off the bus) and creating a culture of discipline The Level 5 HierarchyThe Level 5 Hierarchy Sits on top of a hierarchy of capabilities Four other layers lie beneath it Each one is appropriate in its own right, but none with the power of Level 5 We do not need to move sequentially through each level of the hierarchy to reach the top But to be a fully-fledged Level 5, we need the capabilities of all the lower levels, plus the special characteristics of level 5 Sits on top of a hierarchy of capabilities Four other layers lie beneath it Each one is appropriate in its own right, but none with the power of Level 5 We do not need to move sequentially through each level of the hierarchy to reach the top But to be a fully-fledged Level 5, we need the capabilities of all the lower levels, plus the special characteristics of level 5 The Level 5 HierarchyThe Level 5 Hierarchy Level 1 Highly Capable Individual Level 1 Highly Capable Individual Level 2 Contributing Team Member Level 2 Contributing Team Member Level 3 Competent Manager Level 3 Competent Manager Level 4 Effective Leader Level 4 Effective Leader Level 5 Executive Level 5 Executive The Level 5 HierarchyThe Level 5 Hierarchy Makes productive contributions through talent, knowledge, skills, and good work habits Highly Capable Individual Level 1 Contributes to the achievement of group objectives; works effectively with others in a group settin ...

1. Level 5 Leadership:
Humility + Will
Level 5 Leadership:
Humility + Will
Based on Jim Collins article, “Level 5 Leadership: The Triumph
of
Humility and Fierce Resolve”, in Best Of HBR, HBR,
July-August, 2005, p.136-146
The key to an organization becoming
great is having a Level 5 leader
The key to an organization becoming
great is having a Level 5 leader
Someone who blends genuine personal
humility with intense professional will
Someone who blends genuine personal
humility with intense professional will
“Level 5”“Level 5”
The highest level in a hierarchy of leadership capabilities
Leaders at the other four levels in the hierarchy can produce
high levels of success but not enough to elevate

2. organizations from mediocrity to sustained excellence
Good-to-great transformations don’t happen without Level 5
leadership
Level 5 is not the only requirement for transforming a good
organization into a great one
Other factors include getting the right people on the bus (and
the wrong people off the bus) and creating a culture of
discipline
The highest level in a hierarchy of leadership capabilities
Leaders at the other four levels in the hierarchy can produce
high levels of success but not enough to elevate
organizations from mediocrity to sustained excellence
Good-to-great transformations don’t happen without Level 5
leadership
Level 5 is not the only requirement for transforming a good
organization into a great one
Other factors include getting the right people on the bus (and
the wrong people off the bus) and creating a culture of
discipline
The Level 5 HierarchyThe Level 5 Hierarchy
Sits on top of a hierarchy of capabilities
Four other layers lie beneath it
Each one is appropriate in its own right,
but none with the power of Level 5
We do not need to move sequentially
through each level of the hierarchy to
reach the top
But to be a fully-fledged Level 5, we
need the capabilities of all the lower
levels, plus the special characteristics of
level 5

3. Sits on top of a hierarchy of capabilities
Four other layers lie beneath it
Each one is appropriate in its own right,
but none with the power of Level 5
We do not need to move sequentially
through each level of the hierarchy to
reach the top
But to be a fully-fledged Level 5, we
need the capabilities of all the lower
levels, plus the special characteristics of
level 5
The Level 5 HierarchyThe Level 5 Hierarchy
Level 1
Highly Capable Individual
Level 1
Highly Capable Individual
Level 2
Contributing Team Member
Level 2
Contributing Team Member
Level 3
Competent Manager
Level 3
Competent Manager
Level 4

4. Effective Leader
Level 4
Effective Leader
Level 5
Executive
Level 5
Executive
The Level 5 HierarchyThe Level 5 Hierarchy
Makes productive contributions through talent, knowledge,
skills, and good work habits
Highly
Capable
Individual
Level 1
Contributes to the achievement of group objectives; works
effectively with others in a group setting
Contributing
Team
Member
Level 2
Organizes people and resources toward the effective and
efficient pursuit of predetermined objectives

5. Competent
Manager
Level 3
Catalyzes commitment to and vigorous pursuit of a clear and
compelling vision; stimulates the group to high performance
standards
Effective
Leader
Level 4
Builds enduring greatness through a paradoxical combination
of personal humility plus professional will
ExecutiveLevel 5
Level 5 LeadershipLevel 5 Leadership
Counterintuitive
Countercultural – people generally assume
that transforming from good to great
organizations requires charismatic, larger-
than-life leaders
Counterintuitive
Countercultural – people generally assume
that transforming from good to great
organizations requires charismatic, larger-
than-life leaders

6. Not by Level 5 AloneNot by Level 5 Alone
Level 5 leadership is an essential factor
for taking an organization from good to
great, but it’s not the only one
There are other “drivers”, combined
with Level 5 - the combined package
which takes the organization beyond
unremarkable
The drivers are – First Who, Stockdale
Paradox, the Flywheel, The Hedgehog
Concept and A Culture of Discipline
Level 5 leadership is an essential factor
for taking an organization from good to
great, but it’s not the only one
There are other “drivers”, combined
with Level 5 - the combined package
which takes the organization beyond
unremarkable
The drivers are – First Who, Stockdale
Paradox, the Flywheel, The Hedgehog
Concept and A Culture of Discipline
First WhoFirst Who
Good-to-great leaders start with people
first and then deal with vision and
strategy second
They get the right people on the bus,
Move the wrong people off,
Usher the right people to the right
seats, and

7. Determine where to drive it
Good-to-great leaders start with people
first and then deal with vision and
strategy second
They get the right people on the bus,
Move the wrong people off,
Usher the right people to the right
seats, and
Determine where to drive it
Stockdale ParadoxStockdale Paradox
Named after Admiral James Stockdale, winner of
the Medal of Honour who survived for 7 years in a
Viet Cong POW camp by hanging on to two
contradictory beliefs
His life couldn’t be worse at the moment, and his
life would someday be better than ever
Good-to-great leaders confront the most brutal
facts of their current reality, yet simultaneously
maintained absolute faith that they will prevail in
the end
They held both disciplines – faith and facts – at the
same time, all the time
Named after Admiral James Stockdale, winner of
the Medal of Honour who survived for 7 years in a
Viet Cong POW camp by hanging on to two
contradictory beliefs
His life couldn’t be worse at the moment, and his
life would someday be better than ever
Good-to-great leaders confront the most brutal
facts of their current reality, yet simultaneously

8. maintained absolute faith that they will prevail in
the end
They held both disciplines – faith and facts – at the
same time, all the time
Buildup-Breakthrough
Flywheel
Buildup-Breakthrough
Flywheel
Good-to-great transformations do not happen
overnight or in one big leap
Rather, it starts one movement at a time, gradually
building up momentum, till there is a breakthrough
Mediocre organizations never sustained the
breakthrough momentum but instead lurch back and
forth with radical change programmes, reactionary
moves and restructuring
Good-to-great transformations do not happen
overnight or in one big leap
Rather, it starts one movement at a time, gradually
building up momentum, till there is a breakthrough
Mediocre organizations never sustained the
breakthrough momentum but instead lurch back and
forth with radical change programmes, reactionary
moves and restructuring
The Hedgehog ConceptThe Hedgehog Concept
The fox knows a

9. little about many
things
A fox is complex
The fox knows a
little about many
things
A fox is complex
And the hedgehog wins!
A hedgehog
knows only one
big thing very
well
The hedgehog is
simple
A hedgehog
knows only one
big thing very
well
The hedgehog is
simple
The Hedgehog-like understanding of
three intersecting circles
The Hedgehog-like understanding of
three intersecting circles
What an
organization
can be best

10. in the world
at
How its
economics
work best
What best
ignites the
passions of its
people
Technology AcceleratorsTechnology Accelerators
Good-to-great organizations have a
paradoxical relationship with technology
On the one hand they avoid jumping on new
technology bandwagons
On the other they pioneer the application of
carefully selected technologies, making bold
farsighted investments directly linked to
their hedgehog concept
Like turbochargers, these technology
accelerators create an explosion in flywheel
momentum
Good-to-great organizations have a
paradoxical relationship with technology
On the one hand they avoid jumping on new
technology bandwagons
On the other they pioneer the application of
carefully selected technologies, making bold

11. farsighted investments directly linked to
their hedgehog concept
Like turbochargers, these technology
accelerators create an explosion in flywheel
momentum
A Culture of DisciplineA Culture of Discipline
Good-to-great organizations have
three forms of discipline
1. Disciplined people – you don’t need
hierarchy,
2. Disciplined thought – you don’t need
bureaucracy, and
3. Disciplined action – you don’t need
excessive controls
Combining a culture of discipline with
an ethic of entrepreneurship results
in great performance
Good-to-great organizations have
three forms of discipline
1. Disciplined people – you don’t need
hierarchy,
2. Disciplined thought – you don’t need
bureaucracy, and
3. Disciplined action – you don’t need
excessive controls

12. Combining a culture of discipline with
an ethic of entrepreneurship results
in great performance
Level 5 LeadersLevel 5 Leaders
A study in duality
Modest and wilful,
Shy and fearless
A study in duality
Modest and wilful,
Shy and fearless
A Compelling ModestyA Compelling Modesty
Level 5 leaders are extremely
modest
They don’t talk about themselves
They would talk about the
organization, about the
contribution of others and
instinctively deflect discussion
about their own role
Unlike big personalities like Lee
Iacocca, Jack Welch
Level 5 leaders are extremely
modest
They don’t talk about themselves
They would talk about the
organization, about the

13. contribution of others and
instinctively deflect discussion
about their own role
Unlike big personalities like Lee
Iacocca, Jack Welch
The Yin and Yang of Level 5The Yin and Yang of Level 5
The Yin and Yang of
Level 5
The Yin and Yang of
Level 5
Looks out the window, not in the mirror, to
apportion credit for the success of the
organization – t other people, external factors,
and good luck
Looks in the mirror,not out the window, to
apportion responsibility for poor results,
never blaming other people, external
factors, or bad luck
Sets the standard of building an enduring
great organization; will settle for nothing else
Channels ambition into the organization,
not the self; sets up successors for even
more greatness in the next generation
Demonstrates an unwavering resolve to do

14. whatever must be done to produce the best
long-term results, no matter how difficult
Acts with quiet, calm determination; relies
principally on inspired standards, not
inspiring charisma, to motivate
Creates superb results, a clear catalyst in the
transition from good to great
Demonstrates a compelling modesty,
shunning public adulation; never boastful
Professional WillPersonal Humility
An Unwavering ResolveAn Unwavering Resolve
Besides extreme humility, Level 5
leaders also display tremendous
professional will
They possess inspired standards,
cannot stand mediocrity in any
form, and utterly intolerant of
anyone who accept the idea that
good is good enough
Besides extreme humility, Level 5
leaders also display tremendous
professional will
They possess inspired standards,
cannot stand mediocrity in any
form, and utterly intolerant of
anyone who accept the idea that
good is good enough

15. Succession PlanningSuccession Planning
Level 5 leaders have ambition not for
themselves but for their organizations
They routinely select superb
successors
They want to see their organizations
become even more successful in the
next generation
Comfortable with the idea that most
people won’t even know that the roots
of that success trace back to them
Level 4 leaders often fail to set up the
organization for enduring success –
what better way to demonstrate your
personal greatness than that the place
falls apart after you leave
Level 5 leaders have ambition not for
themselves but for their organizations
They routinely select superb
successors
They want to see their organizations
become even more successful in the
next generation
Comfortable with the idea that most
people won’t even know that the roots
of that success trace back to them
Level 4 leaders often fail to set up the
organization for enduring success –
what better way to demonstrate your
personal greatness than that the place
falls apart after you leave

16. The Window and the MirrorThe Window and the Mirror
Level 5 leaders, inherently humble,
look out the window to apportion
credit – even undue credit – to
factors outside themselves
If they cannot find a specific event
or person to give credit to, they
credit good luck
Level 5 leaders, inherently humble,
look out the window to apportion
credit – even undue credit – to
factors outside themselves
If they cannot find a specific event
or person to give credit to, they
credit good luck
At the same time, they look in
the mirror to assign
responsibility, never citing bad
luck for external factors when
things go poorly
At the same time, they look in
the mirror to assign
responsibility, never citing bad
luck for external factors when
things go poorly
Compare this with leaders who look out the
window for factors to blame but preened
in the mirror to credit themselves when

17. things go well
Compare this with leaders who look out the
window for factors to blame but preened
in the mirror to credit themselves when
things go well
Born or Bred? : Can Level 5
be developed?
Born or Bred? : Can Level 5
be developed?
There are two categories of people
Those who don’t have the Level 5 seed
within them,
And those who do
There are two categories of people
Those who don’t have the Level 5 seed
within them,
And those who do
The first categoryThe first category
Will never bring themselves to
subjugate their own needs to the
greater ambition of something larger
and more lasting than themselves
Work will always be first and foremost
of what they get – fame, fortune,
power, adulation, etc.

18. Work will never be about what they
build, create and contribute
The great irony is that the animus and
personal ambition that often drives
people to become a Level 4 leader
stands at odds with the humility
required to rise to Level 5
Will never bring themselves to
subjugate their own needs to the
greater ambition of something larger
and more lasting than themselves
Work will always be first and foremost
of what they get – fame, fortune,
power, adulation, etc.
Work will never be about what they
build, create and contribute
The great irony is that the animus and
personal ambition that often drives
people to become a Level 4 leader
stands at odds with the humility
required to rise to Level 5
The second categoryThe second category
Could evolve to level 5
Capability resides in them, perhaps buried or ignored
or simply nascent
Under the right circumstances – with self-reflection,
a mentor, a significant life experience, loving
parents, or other factors – the seed can begin to
develop
Could evolve to level 5

19. Capability resides in them, perhaps buried or ignored
or simply nascent
Under the right circumstances – with self-reflection,
a mentor, a significant life experience, loving
parents, or other factors – the seed can begin to
develop
Level 5Level 5
A key component inside the
black box of what it takes to shift
an organization from good to
great
Inside this black box is another –
the inner development of a
person to Level 5 leadership
A very satisfying idea, a truthful
idea, a powerful idea, and to
make the move from good to
great, very likely an essential
idea
A key component inside the
black box of what it takes to shift
an organization from good to
great
Inside this black box is another –
the inner development of a
person to Level 5 leadership
A very satisfying idea, a truthful
idea, a powerful idea, and to
make the move from good to
great, very likely an essential
idea

20. “For like all basic truths
about what is best in
human beings,
“For like all basic truths
about what is best in
human beings,
when we catch a glimpse of that truth, we know that
our own lives and all that we touch will be better for
making the effort to get there.”
when we catch a glimpse of that truth, we know that
our own lives and all that we touch will be better for
making the effort to get there.”
F.M. Dekking C. Kraaikamp
H.P. Lopuhaä L.E. Meester
A Modern Introduction to
Probability and Statistics
Understanding Why and How
With 120 Figures
Frederik Michel Dekking

21. Cornelis Kraaikamp
Hendrik Paul Lopuhaä
Ludolf Erwin Meester
Delft Institute of Applied Mathematics
Delft University of Technology
Mekelweg 4
2628 CD Delft
The Netherlands
Whilst we have made considerable efforts to contact all holders
of copyright material contained in this
book, we may have failed to locate some of them. Should
holders wish to contact the Publisher, we
will be happy to come to some arrangement with them.
British Library Cataloguing in Publication Data
A modern introduction to probability and statistics. —
(Springer texts in statistics)
1. Probabilities 2. Mathematical statistics
I. Dekking, F. M.
519.2
ISBN 1852338962
Library of Congress Cataloging-in-Publication Data
A modern introduction to probability and statistics :
understanding why and how / F.M. Dekking ... [et
al.].
p. cm. — (Springer texts in statistics)
Includes bibliographical references and index.
ISBN 1-85233-896-2
1. Probabilities—Textbooks. 2. Mathematical statistics—
Textbooks. I. Dekking, F.M. II.

22. Series.
QA273.M645 2005
519.2—dc22 2004057700
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the publishers.
ISBN-10: 1-85233-896-2
ISBN-13: 978-1-85233-896-1
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The use of registered names, trademarks, etc. in this publication
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23. Printed in the United States of America
12/3830/543210 Printed on acid-free paper SPIN 10943403
Preface
Probability and statistics are fascinating subjects on the
interface between
mathematics and applied sciences that help us understand and
solve practical
problems. We believe that you, by learning how stochastic
methods come
about and why they work, will be able to understand the
meaning of statistical
statements as well as judge the quality of their content, when
facing such
problems on your own. Our philosophy is one of how and why:
instead of just
presenting stochastic methods as cookbook recipes, we prefer to
explain the
principles behind them.
In this book you will find the basics of probability theory and
statistics. In
addition, there are several topics that go somewhat beyond the
basics but
that ought to be present in an introductory course: simulation,
the Poisson
process, the law of large numbers, and the central limit theorem.
Computers
have brought many changes in statistics. In particular, the
bootstrap has
earned its place. It provides the possibility to derive confidence
intervals and
perform tests of hypotheses where traditional (normal
approximation or large

24. sample) methods are inappropriate. It is a modern useful tool
one should learn
about, we believe.
Examples and datasets in this book are mostly from real-life
situations, at
least that is what we looked for in illustrations of the material.
Anybody who
has inspected datasets with the purpose of using them as
elementary examples
knows that this is hard: on the one hand, you do not want to
boldly state
assumptions that are clearly not satisfied; on the other hand,
long explanations
concerning side issues distract from the main points. We hope
that we found
a good middle way.
A first course in calculus is needed as a prerequisite for this
book. In addition
to high-school algebra, some infinite series are used
(exponential, geometric).
Integration and differentiation are the most important skills,
mainly concern-
ing one variable (the exceptions, two dimensional integrals, are
encountered in
Chapters 9–11). Although the mathematics is kept to a
minimum, we strived
VI Preface
to be mathematically correct throughout the book. With respect
to probabil-
ity and statistics the book is self-contained.
The book is aimed at undergraduate engineering students, and

25. students from
more business-oriented studies (who may gloss over some of the
more mathe-
matically oriented parts). At our own university we also use it
for students in
applied mathematics (where we put a little more emphasis on
the math and
add topics like combinatorics, conditional expectations, and
generating func-
tions). It is designed for a one-semester course: on average two
hours in class
per chapter, the first for a lecture, the second doing exercises.
The material
is also well-suited for self-study, as we know from experience.
We have divided attention about evenly between probability and
statistics.
The very first chapter is a sampler with differently flavored
introductory ex-
amples, ranging from scientific success stories to a
controversial puzzle. Topics
that follow are elementary probability theory, simulation, joint
distributions,
the law of large numbers, the central limit theorem, statistical
modeling (in-
formal: why and how we can draw inference from data), data
analysis, the
bootstrap, estimation, simple linear regression, confidence
intervals, and hy-
pothesis testing. Instead of a few chapters with a long list of
discrete and
continuous distributions, with an enumeration of the important
attributes of
each, we introduce a few distributions when presenting the
concepts and the
others where they arise (more) naturally. A list of distributions

26. and their
characteristics is found in Appendix A.
With the exception of the first one, chapters in this book consist
of three main
parts. First, about four sections discussing new material,
interspersed with a
handful of so-called Quick exercises. Working these—two-or-
three-minute—
exercises should help to master the material and provide a break
from reading
to do something more active. On about two dozen occasions you
will find
indented paragraphs labeled Remark, where we felt the need to
discuss more
mathematical details or background material. These remarks can
be skipped
without loss of continuity; in most cases they require a bit more
mathematical
maturity. Whenever persons are introduced in examples we have
determined
their sex by looking at the chapter number and applying the rule
“He is odd,
she is even.”
Solution
s to the quick exercises are found in the second to last
section of each chapter.
The last section of each chapter is devoted to exercises, on
average thirteen
per chapter. For about half of the exercises, answers are given

27. in Appendix C,
and for half of these, full solutions in Appendix D. Exercises
with both a
short answer and a full solution are marked with � and those
with only a
short answer are marked with � (when more appropriate, for
example, in
“Show that . . . ” exercises, the short answer provides a hint to
the key step).
Typically, the section starts with some easy exercises and the
order of the
material in the chapter is more or less respected. More
challenging exercises
are found at the end.
latecki
Highlight
latecki
Highlight
Preface VII

28. Much of the material in this book would benefit from
illustration with a
computer using statistical software. A complete course should
also involve
computer exercises. Topics like simulation, the law of large
numbers, the
central limit theorem, and the bootstrap loudly call for this kind
of experi-
ence. For this purpose, all the datasets discussed in the book are
available at
http://www.springeronline.com/1-85233-896-2. The same Web
site also pro-
vides access, for instructors, to a complete set of solutions to
the exercises;
go to the Springer online catalog or contact [email protected] to
apply for your password.
Delft, The Netherlands F. M. Dekking
January 2005 C. Kraaikamp
H. P. Lopuhaä
L. E. Meester
latecki

29. Highlight
Contents
1 Why probability and statistics? . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 1
1.1 Biometry: iris recognition . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . 1
1.2 Killer football . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 3
1.3 Cars and goats: the Monty Hall dilemma . . . . . . . . . . . . . . .
. . . . 4
1.4 The space shuttle Challenger . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . 5
1.5 Statistics versus intelligence agencies . . . . . . . . . . . . . . . .
. . . . . . . 7
1.6 The speed of light . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . 9
2 Outcomes, events, and probability . . . . . . . . . . . . . . . . . . . . .
. . . . 13
2.1 Sample spaces . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 13
2.2 Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

30. . . . . . . . . . . 14
2.3 Probability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 16
2.4 Products of sample spaces . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . 18
2.5 An infinite sample space . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . 19
2.6