After the 1-0 defeat to Aston Villa in midweek, City have gone four league matches without a win to slip to fourth in the table.
The boss says his side were second best in the defeat at Villa Park and they have been given a challenge to rediscover their best form, starting with Sunday’s trip to Luton Town for the 14:00 (UK) kick-off.
But there is also need no need to panic with more than half of the season still remaining to play.
“It’s a good challenge for the players to say: ‘Oh my god, Villa were so much better,” Guardiola said in his prematch press conference.
“Aston Villa were better, all the organisation said we could be out of the Champions League this season, we have to work hard.
“After the last few years we need it and then we can come out of here, otherwise nothing will change.
“We’re in December, not even finished the first leg, a lot of games to play, Champions League, [in the] FA Cup we play Huddersfield, there are many exciting things ahead of us that we have to embrace.
“With that in mind say: ‘okay let’s work’. The club needs it. We need a shake, bad results can help that.”
But Guardiola said the recent results were nothing to do with complacency on the back of our success in recent years.
The recent blip reflects the competitiveness of the Premier League and the levels that City have reached to maintain our success.
“It’s not complacency,” he added. “Complacency is when you arrive late and don’t do your job.
“I’m saying the bad results show how difficult [it is] what we’ve done and what we do, the bad results help.
“Even for the media, they say yes. Four games without a win can be five, six or seven. And even the media say ‘oh, they can lose’. All the people say, October, November City will win, we just need to discover the next three. But look how others come year by year.
“We have made a standard that people want to be there. I see the hunger in the opponents, to win. To recover that you have to lose.
“This is the problem though if you lose it’s necessary. To realise it’s not my worst. Themselves on the pitch I said ‘Oh my god, the opponents are better’.”
Luton will provide another big test as we visit Kenilworth Road for the first time in the Premier League and first time in 25 years.
The Hatters only lost to Arsenal on Tuesday via a 97th minute winner while they also drew with Liverpool earlier in the season.
In seven Premier League home matches, they have not been beaten by more than a single goal margin and Guardiola says he has been impressed with their performances when preparing for the game.
“They’ve done really well,” he said. “Really, really well for the way they have played.
“Top clubs and teams like Arsenal and Liverpool have struggled to win.
“It’ll be the same for us but we’re ready for the challenge. We have to keep working and we’ll try to do what we have to do.”