A whipsaw, according to Investopedia, is a situation where a security’s price heads in one direction, but then quickly goes in the opposite direction. Its name comes from the narrow bladed, two-handled saw used by lumberjacks.
I recently had an experience at a client where top management told the employees to do one thing, only to change their minds and tell them to do exactly the opposite thing within a very short period of time. It might seems like a small error, but it cost the company millions of dollars in cash flow.
Before you take an action that may need to be quickly reversed, examine the action within the context of your business and operations strategy. If the action is not congruent with that strategy, don’t do it. Of course, this presumes you have a strategy. One of the purposes of good strategy is to provide focus and direction, so you don’t whipsaw your employees.
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