But it’s not that simple. Things aren’t as tight or as financial as they appear, because change brings uncertainty and uncertainty brings emotion. (Uncertainty is far more emotional than financial.) More than anything, emotion gnarls and galls the gears of change.

Uncertainty drives activities that slow change. You know some of the usual suspects by name: robustness testing, failure mode and effects analysis, scenario planning, and modeling and simulation. Reducing uncertainty—or more precisely, reducing its consequences—is a good idea. However, all these tactics are judgment-based, and judgment is governed by emotion. Test plans are more thorough (and longer) when the designer is afraid to fail. Risk priority numbers are amplified (and therefore more design work is required) when the FMEA folks are stressed out. Worst case scenarios are worse when the planner’s emotional state is fragile. Safety factors in models grow as the engineer’s self-confidence wanes. When the cost of change is calculated, the cost is made up of the transactional, non-judgment activities, and no weight is given to the emotional elements that can radically increase the cost of change.

The cost of change is not measured in financial terms; it’s measured in emotional terms. Taken to the extreme, the cost of a radical change (a game-changer) can be so large in emotional terms, it can cause a team to balk, even before they get to a traditional cost-benefit analysis. The key is to reduce the emotional cost of change.

It’s the leader’s responsibility to reduce the emotional cost of change. In plain terms, the leader is responsible for creating a climate where people are not afraid to fail. The best approach I know has two elements—block and build.

The team sits in the context of the company, and the leader must block the team from environmental factors that increase the cost of change. If an experiment fails, the leader must step in and block the negative consequences from outside, usually by explaining the importance of the learning objective, and diverting attention toward the quality of execution and the learning.

Another way a leader can block is to proactively explain to the company that the team is trying some important new things that may not work, and, thankfully they have enough courage to try.

With the second element—build—the leader must help the team build its self-confidence, so it can push through more change with less cost. (A team with more self-confidence generates less fear and, therefore, less cost.)

Positivity builds and negativity tears down, so the first rule of building is to say nothing negative. Praise tightrope walking and hang gliding at every opportunity and you’ll get more; ignore the things you want less of and you’ll get less.

 Now, when innovation is ever more important, it’s time for leaders to block and build their way to a company culture that values the emotional cost of change.