Conflict Escalation in Negotiations: From Win-Win to Lose-Lose
Glasl’s Stages of Escalation and How to Navigate Critical Turning Points
You’re sitting in the conference room with your task force, laptops open and masks on, surrounded by the empty halls of your office building. Outside, the world is working from home, but your team is here, on the frontlines, managing a supply crisis that threatens to bring everything to a standstill. The latest email from your supplier flashes on your screen, and what started as a promising negotiation for electronic components has quickly spiraled into a full-scale battle.
The shortages caused by the pandemic are hitting hard — skyrocketing prices, unpredictable delivery schedules, and a supplier suddenly unwilling to commit. It’s becoming clear that what should have been a routine deal has escalated into a high-stakes standoff. The familiar signs of conflict are there: rising demands, shrinking flexibility, and an undercurrent of frustration on both sides. It feels like everything could fall apart at any moment.
Sounds familiar? During COVID-19, escalation in negotiations became a constant for many teams in supply chain. When supply chains crumbled, escalation wasn’t just a possibility; it became the new norm. Whether used to gain leverage or as a desperate attempt to push through a deal, escalation was often the only path forward. Before we dive into the strategies we can use to manage this, let’s break down what escalation in negotiation really means.
As usual in Games and Negotiations, I like to find a classical painting that captures the essence of the topic at hand. I find that "The Oath of the Horatii" by Jacques-Louis David (This masterpiece is in the Louvre) perfectly illustrates the nature of escalation in conflict. The painting shows the moment just before a battle, where both sides are firmly committed to their positions and emotions are running high.
An interesting framework that describes the stages of escalation is the research made by Austrian conflict researcher Friedrich Glasl and his work on the stages of Conflict Escalation.
It starts with Win-Win…
In the first phase, the atmosphere is still manageable. There’s tension, but both sides are still engaged, believing a beneficial agreement is possible - at least for them. However this doesn’t mean everything is harmonious - quite far from it actually. Disagreements and back-and-forth demands are common, and actions begin to speak louder than words.
Consider the negotiation between a large retailer and a supplier over volume discounts. At this stage, both sides present their cases: the supplier explains why they can’t reduce prices further, citing rising material costs, while the retailer pushes for larger discounts, banking on their purchasing power. The exchange remains professional, and both sides believe there’s room for concessions.
Most negotiations start and even end at this stage, Its important at this stage of escalation to not let negative emotions take over. Keep the exchange focussed on facts, figures, and each party’s interests. Being gentle in managing this stage allows you to strategically trigger the next stage of escalation in case a deadlock arises. Here, It’s not about creating conflict for conflict’s sake, but about leveraging tension to push for a resolution. For example, escalating by introducing higher-level stakeholders, removing certain agreed elements or setting stricter deadlines can signal seriousness and increase pressure, allowing the other party to reconsider their position. However, this must be done with precision and a lot of positive signalling. You have to allow and signal for a clear path of win-win. In all cases, strategically using escalations should serve as a calculated risk, never as an emotional reaction.
At this stage escalation means highlighting the consequences of inaction or continued rigidity, without provoking a retaliatory escalation from the other side. This is quite important when the negotiation involves long-term partnerships, where trust and cooperation are critical. Timing is key — escalating too soon or too aggressively can easily backfire, pushing the negotiation into a win-lose dynamic, making cooperation harder to re-establish later.
Now, let’s go to the next level of escalation according to Glasl.
You failed a Win-Win? Win-Lose now starts creeping in …
The tone shifts. What started as a conversation over details now becomes a test of strength and endurance. The original issues—whether it’s pricing, terms, or lead times—takes a backseat as both sides become more focused on gaining the upper hand. In procurement, this often manifests as suppliers threatening to walk away or buyers leveraging their position to demand steep concessions.
Take, for instance, a scenario where a manufacturer demands last-minute changes to a contract, threatening to look for alternative suppliers if their terms aren’t met. The supplier, feeling cornered, might counter by tightening delivery schedules or refusing to provide critical data needed for the negotiation.
This phase is a slippery slope. It’s where parties start pulling in reinforcements — legal teams, external consultants, or other stakeholders — to fortify their position. The discussion is no longer about finding a mutually beneficial solution but about winning.
So how to deal with counter-parties forcing you into this phase? Rather than meeting escalation with equal force, adopt a strategy of measured responses. Push back just enough to show you're serious, but not so much that you close off further dialogue. This approach is basically the game-theoretic Tit-for-Tat strategy, where a proportional response signals both firmness and a willingness to cooperate.
By responding in kind but leaving the door open for resolution, you demonstrate that you're still committed to finding common ground—provided the other party is prepared to do the same. This is of course not universal advice. Your mileage might vary significantly.
And at last, we are at Lose-Lose.
This is the last stage of Glasl’s model and this is the point of no return—when both sides become so focused on their positions that the original goal is forgotten, and the only priority left is damage control. In procurement and sales, this could mean contracts being canceled, partnerships breaking down, or even legal action. At this stage, it’s no longer about finding a solution. Instead, both sides are trying to minimize their losses and protect whatever is left of the business relationship.
What makes this stage difficult is that, unlike in earlier phases, escalation can no longer be used strategically. As Glasl describes it, you are already in the abyss. More escalation at this point simply prolongs the conflict, often with more damage on both sides. Psychologically, the lose-lose state can become stable because both parties are locked into a cycle of retaliation, where admitting defeat or backing down feels like a loss of face or credibility. Behavioral science tells us that humans tend to double down in such scenarios, driven by the sunk cost fallacy—the idea that because they’ve already invested so much into the conflict, walking away feels like a greater loss than continuing the fight.
This is why, once you reach the lose-lose stage, it’s incredibly hard to reverse course. Both sides are focused on inflicting damage on the other rather than seeking mutual gain, and any further escalation only drags both parties deeper into the cycle of loss.
For example, imagine a buyer insists on harsh penalties for late deliveries, and the supplier, feeling cornered, decides to walk away from the deal altogether—even if it means losing an important client. In the end, the buyer faces supply disruptions, and the supplier loses a major contract. Both sides end up worse off than before.
Being in this stage means both sides are struggling to make progress at the negotiation table. If you find yourself here, it’s critical to stay calm, measured, and avoid letting negative emotions take control. De-escalation often involves shifting the dynamics in a real radical way—whether it’s bringing in a fresh team, giving the negotiation a lot more time, or changing a key part of the process, like introducing mediation or arbitration. Unfortunately, many negotiations stall at this point, and the chances of reaching a resolution become slim to none. While being stuck, many negotiators with strong BATNAs will try to escalate even further at this stage - this doesn’t work. You can’t ‘escalate to de-escalate’ once you are at this stage (Check out Jon Stewart’s The Daily Show segment for that video!)
As a reminder to all negotiators: humans are far from purely rational beings. Fairness, respect, and saving face are crucial elements in any negotiation. If you fail to recognize and account for that, you're not just missing a step—you’re failing at negotiation itself.
It’s not conflict that destroys relationships, but how we manage the escalation. Poorly handled conflicts can push both sides too far, leading to irreversible damage, while a thoughtful approach can prevent lasting harm.
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Such a great read!