MK Dons fell to their first defeat in five games on Monday, as an Adam Armstrong double secured the three points for promotion-chasing Blackburn Rovers.
A change of formation at half-time from Dan Micciche breathed life into the Dons who were, in the end, unfortunate to not take something from the game.
Pawlett reduced the deficit 72-minutes into the clash, however, the Dons couldn't find a way past the impressive David Raya, while they also had a number of penalty appeals turned away by Kevin Friend.
"We are disappointed," Pawlett told the media following the full-time whistle. "In the first-half, we showed them too much respect but we gathered at half-time and were much better in the second-half.
"We put them under pressure, created chances and they struggled to get out of their half. We have to take confidence from this – even though it's disappointing that we got beat."
Micciche made a double change at half-time with Kieran Agard and Scott Golbourne replacing Robbie Muirhead and Ousseynou Cisse respectively.
The Dons also changed their shape into a 3-5-2 formation and Pawlett noted the importance of the change in shape while also praising the impact Micciche has had on the side.
"Kieran made a real impact when he came on, just as Scott Golbourne did. We changed the shape of the team, which was massive.
"The manager identified what the problem was and changed it up – that allowed us to get further up the pitch."
Pawlett added: "The manager has been brilliant and I've really enjoyed working with him and Keith – as have a lot of the lads.
"He's a top coach and hopefully, we can stay in the league and it'll prove to be a great appointment."
The 27-year-old concluded that the Dons can go to Wigan [Athletic] this weekend full of belief after their showing against one of the promotion favourites.
"Wigan will have more of the ball but performances like this will give everyone confidence - we're a good side and we need to go toe-to-toe with Wigan.
"We have taken a team which could win the league right to the final whistle. If we can carry that belief to Wigan – we can get something."