Hysteresis

Hysteresis is when the state of a system depends not only on current conditions but on its history. The path you took to get here matters. The same input can produce different outputs depending on whether you arrived by increasing or decreasing the input. The classic example: a magnetic material's magnetisation depends on whether you've been increasing or decreasing the applied field; the relationship between field and magnetisation forms a loop, not a single curve. In economics and behaviour, hysteresis appears when past unemployment affects long-run employment, when past prices affect current demand, or when switching between options is costly so that "going back" doesn't undo "having left." The system has memory. It doesn't reset when the driving variable resets. The strategic implication: once you've moved (customers churned, talent left, capacity closed), reversing the move may not return you to the prior state. The cost of reversal is hysteresis.

Hysteresis creates stickiness and asymmetry. Getting into a state may be easier than getting out (e.g. joining a contract vs exiting). Or the reverse: leaving is easy, re-entering is hard (e.g. trust once broken). The loop — different response on the way up vs the way down — is the signature. Linear thinking assumes that if you undo the cause, you undo the effect. Hysteresis says: the effect can persist or the reverse path can be different. Policy and strategy that ignore hysteresis assume reversibility. When hysteresis is present, one-way decisions (layoffs, exit, closure) have long-lasting effects. The discipline is identifying where history matters and where reversal is costly or impossible.

The model appears in labour markets (long-term unemployment reduces employability), in technology (legacy systems persist because switching back is costly), and in relationships (trust, once broken, doesn't simply restore when the breach is "reversed"). Where you see "we can always reverse this" but reversal is costly or the state doesn't reset, hysteresis is at work.