Pep Guardiola concedes Manchester City may no longer be able to match the standards of the best teams.
Guardiola's City have been the Premier League's outstanding side over the past two years, clocking up 100 points in 2017-18 and then retaining the title last term as part of a treble-winning campaign.
But this season has so far proved a reality check, with City falling 14 points behind leaders Liverpool after just 16 games following four defeats.
The latest of those losses came in a 2-1 reverse to rivals Manchester United in Saturday's derby at the Etihad Stadium.
Guardiola hopes City will at least be able to learn from their setbacks.
The City boss said: "United have the quality to defend and the quality to attack on the counter-attack and you have to accept that.
"That is the level we face against Liverpool, United, Barcelona, Madrid, Juventus, they are the teams we have to face and the reality is maybe we are not able now to compete with them.
"We have to improve and accept it and move forward. Maybe we need to live that as a club to improve, to accept the reality now and improve."
Guardiola, however, is not ready to give up on his side's title defence and there is also plenty more to play for in the remainder of the campaign.
City are already through to the last 16 of the Champions League ahead of Wednesday's final group game against Dinamo Zagreb.
They play in the Carabao Cup quarter-finals later this month as they bid to win that competition for a third successive season.
They have also been given a kind draw against League Two Port Vale for the start of their FA Cup defence next month.
Guardiola said: "The reality is we are 14 points behind for the mistakes we have done, for the quality of our opponents and especially, as well, the things we cannot control. That is the reality but we have to continue.
"We are at the beginning of December and we have other competitions to play in and other games to fight and improve on. Maybe this is going to help us for the future so we need to live this as a club to be better."
Despite that, Guardiola is not yet ready to start prioritising competitions.
He said: "We are not thinking of winning the Champions League, I am not thinking about how many points we need or how many points they have to drop. We are trying to win games, to win the next one."
