Building a resilient company and communities

A slew of challenges is testing the mettle of companies and communities alike. For Sarah Friar, chief executive of local information app Nextdoor, thriving in this uncertain environment requires diverse perspectives, a tilt to local solutions, playbooks to anticipate the unexpected and a healthy regard for unforeseen consequences

During this time of great uncertainty – marked by protracted pandemic-related risks, rising geopolitical tensions, expanding cyber threats, talent market upheavals and more – senior leaders are sharpening their focus on resilience. What makes some companies so much more resilient than others? How can we build resilience into our organisations? How should we think about potential trade-offs between resilience and more immediately obvious benefits such as speed, efficiency and cost?

McKinsey & Company recently hosted a virtual leaders’ summit on building resilience in uncertain times. Among the guest speakers was Nextdoor chief executive Sarah Friar. Nextdoor is an app that allows users to connect to the neighbourhoods that matter to them. The app currently operates across 285,000 neighbourhoods in 11 countries. Before becoming chief executive of Nextdoor, Friar served as chief financial officer (CFO) at Square, senior vice-president of finance and strategy at Salesforce, held executive roles at Goldman Sachs and began her career at McKinsey in London and South Africa. Friar currently serves on the board at Walmart and on the advisory board of Hope Global, and is the co-founder of Ladies Who Launch, a non-profit that celebrates and empowers female entrepreneurs. She was interviewed by McKinsey senior partner Olivia White, a member of the firm’s financial services, risk and social sector practices.

How has Nextdoor been thinking about resilience – for itself and the neighbourhoods it serves – throughout the Covid‑19 pandemic?

Sarah Friar, Nextdoor

Sarah Friar: Even before Covid‑19 struck, we knew that Nextdoor bolsters neighbourhood resilience. Resilience expert Courtney Page-Tan¹ had previously analysed interactions on Nextdoor in high-density neighbourhoods hit by Hurricane Harvey in 2018. He correlated high levels of engagement on Nextdoor with faster recovery times. He also highlighted the platform’s function as a place where residents could help one another at a time when public agencies were overwhelmed. His work resonated with our strategy in that the power of proximity comes into play when a neighbour boats over to a nearby home, rescues a family from the roof and delivers them to safety. Page-Tan advises policy-makers to invest in hyper-local communities, online and offline, to build resilience ahead of the next crisis. In so doing, they fill a critical, local need that is not met by today’s dominant tech platforms.

In February 2020 I was in the UK. At this time, the Covid-19 pandemic was in its early stages, but we immediately began seeing a massive spike in global daily active users on Nextdoor; our numbers were doubling week on week. The huge increase in traffic tested our resilience but, fortunately, Nextdoor is built on a modern, scalable architecture, so we did well with that test. As the pandemic spread, we also observed how quickly people stepped up to offer help, so we built features to support that. These included ‘help maps’, where those requesting help – for example, an elderly neighbour looking for someone to go to the supermarket – could be paired with someone ready to run that errand.

We also worked to ensure the information we provided on the platform was trustworthy, leveraging the strong relationships we had previously built with public agencies including, for example, the Federal Emergency Management Agency in the US, the Mayor of London, and many others. In that moment, Nextdoor acted as a megaphone for governments to get their messages out. As the pandemic continued to unfold, we extended the platform to local businesses and beyond.

Have you improved your ability to predict when tricky issues might present themselves?

Sarah Friar: We absolutely have developed that muscle. Of course, no one red-teamed a pandemic, but we did considerable work around the US elections, for example, to manage misinformation and disinformation – and that informed our pandemic response. Even if we can’t foresee the exact situation, we see commonalities in terms of what to expect and how to respond. Many tech companies excel at using playbooks that lay out step-by-step what to do in the event of a site outage. Playbooks can be helpful in preparing for all manner of unforeseen risks.

What have you learned about managing risk in previous roles at other platform companies that you’ve applied to your current position?

Sarah Friar: Much of what I’ve learned is translatable, starting with the imperative to surround yourself with diverse opinions. Beyond that, I’ve also learned to have a healthy fear of cyber risk. At Square, prior to launching any new product, we’d conduct a red-room exercise to stress-test our security protocols. We’d sit around a table and invariably someone would ask: ‘How could I steal money using this product?’ As CFO of the company, that was both my favourite and least favourite question. Anxiety comes from not knowing what you’re up against. Once you imagine the risk and put plans in place to mitigate them, it eases the anxiety and builds resilience.

At Nextdoor, before we launch a new feature or product, we repeatedly go through the exercise of considering how it could go off the rails. We also occasionally set aside time for a multiday offsite meeting where we step back and look at the big picture and what could go wrong at the company level.

Moderating content on a social media platform is not easy. Can you share a challenge that you’ve encountered, what you learned from it and how it informs your thinking about resilience?

Sarah Friar: At the highest level, the challenge we deal with every day is moderating engagement to nudge people to be their better selves, but without prompting legitimate concerns about censorship. Neighbourhoods are the fulcrum of change – and frequently where contentious conversations about local issues are occurring. In Northern Ireland, where I grew up, the conflict that began in the 1960s and finally ended in 1998 would still be going on if people living side by side but divided by religion hadn’t come together ultimately to have constructive, albeit difficult, discussions aimed at reconciliation.

On Nextdoor, we’ve built infrastructure to facilitate those discussions. A notification may pop up at a relevant moment with a kindness reminder or a request to source information – for example about Covid-19 or vaccines – that could be inaccurate or misleading.

How do you manage the many global uncertainties that challenge business and societal resilience?

Sarah Friar: In my roles as a company executive and a board member it’s easy to become mired in the pressing, day-to-day considerations and to lose peripheral vision. It’s important to stay broadly educated and to ‘zoom out’ to the 50,000-foot level at times to retain a broad perspective. Scenario-based risk assessments can be great for providing corporate leaders with a vehicle for exploring long-term issues such as geopolitical shifts and for moving the conversation from the abstract to the concrete. I credit this approach with leading me to determine, for example, that we needed much more diversity on our board to properly confront the big issues related to race. That imperative – to include many different voices – applies equally as we build out our global footprint.

In your roles as a company executive and a board member, how do you balance your short- and long-term perspectives with an eye toward building resilience?

Sarah Friar: That’s a relevant question at this moment because we recently took Nextdoor public. In the early days of building a private company, investors tend to give you a long leash and you spend quite a bit of time thinking about the long-term. In a public company, by contrast, you can very quickly find yourself focused on quarterly earnings. It’s my job to push against that mindset, including by surrounding myself with people who will continually ask: ‘What will this look like 10 years from now?’ Additionally, if you position yourself as a growth company, as we have done with Nextdoor, then you hopefully will attract investors who support investing to grow.

At Nextdoor we talk about core, strategic and venture bets. At our scale, core is still a primary focus; we have product-market fit, we’ve learned to monetise it and there’s still white space. Strategic bets have a one- to three-year return. And then we place one or two venture bets with a five-year time horizon. I treat these like a venture capitalist does, with a seed round of investment – here is X amount of money, now lean into our ‘experiment and learn quickly’ the value to see what we uncover. Hire great engineers, build a product and see if you can find product-market fit. Come back when you’re 80% done and then let’s decide on the right metrics – often engagement and growth – and whether we can create a flywheel on the platform to deliver viral growth. All this is happening long before there’s revenue attached to it.

In the short term, I’m more into the cycles of the resiliency of neighbourhoods – how do we keep gleaning insights from our customers and then apply those ideas globally?

What does Nextdoor do internally to bolster that resiliency at a local level?

Sarah Friar: It begins with having diverse voices in leadership positions. Nextdoor neighbourhoods reflect the diversity of the world; if we’re going to build a product for them, then we need to look like them. Seven out of 10 people on our executive team were born outside the US.

We also rely heavily on advisory boards; we have four despite our relatively small size. A client advisory board helps give guidance on product innovation. A neighbourhood vitality board – a diverse group of academics and experts in the fields of social psychology, equality and civic engagement – counsels us on the necessary elements of thriving communities and how to build deeper connections among neighbours. A small business advisory board focuses on small and local businesses, and a public agency advisory board connects us to the voices of public sector constituents and customers at various levels of government.

As you look ahead, how do you think Nextdoor and other tech companies must adapt to succeed in a post-pandemic world?

Sarah Friar: There has been a structural shift to local that likely will endure. Additionally, the second wave of the mobile revolution – following a mobile phone in every pocket – is now upon us; it’s been proven that a large portion of the workforce can work from anywhere. It’s almost hard to believe that just two years ago we were issuing noise-cancelling headphones to newly hired engineers to help them concentrate in our open-office layout.

On the flipside, we fundamentally believe there is power in people coming together, so we’re making sure to support that value at Nextdoor. It’s especially critical for junior people who really need those informal mentorship moments. Innovation also suffers when we don’t have those impromptu conversations between, say, a product manager and a designer who may not work together every day. We also build up social capital when we meet in person, which gives us resilience during contentious conversations.

What key takeaways would help a company be resilient?

Sarah Friar: First, ensure diversity of thought – among the leadership team and the board of directors – and use advisory boards to provide specialised guidance. Second, conduct scenario planning exercises and develop playbooks to be ready to respond to emergency situations. Third, before launching new features, think long and hard about the potential unforeseen consequences and how to mitigate them. Fourth, think locally about how to build resilience in neighbourhoods. Glean insights from customers, build for them at a local level, and then find ways to take that database of great ideas across the globe. There’s tremendous power in applying local fixes to global issues.

Notes

^{1. Dr Courtney Page-Tan is an assistant professor of human resilience and chair of the MS in human security and resilience degree programme in the Department of Security and Emergency Services at Embry-Riddle Aeronautical University}

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