The City manager was heavily critical of his players' performance in their 4-2 victory over Tottenham on Thursday, in which they had needed to fight back from 2-0 down.
Coming after a disappointing Carabao Cup exit at Southampton and an - albeit controversial - derby defeat at Manchester United, alarm bells have been ringing over City's form.
Guardiola feels a spark has been lacking from his side's play and, with Arsenal five points clear at the top of the table, he wants them to find it quickly.
He said: "We are still here. We are second in the table, we are not 25 points behind, we are there and there are 57 points still to play for.
"But what I am saying is, (playing) in this way - no chance.
"We have time to recover, we have the FA Cup and the Champions League - and next season - but the club has to react.
"Arsenal have everything with set-pieces, defensive organisation, how they win duels, how they celebrate goals, how they talk, how they look each other, how they communicate.
"This is football, this is tactics as well, and right now we don't have it.
"I'm sorry for our haters, we will be in the history books in the Premier League for what we have done. It is undeniable how good we have done.
"But it's the past. Now is here and our fans want the second half (against Tottenham) more often. This is what we have to find."
City would have been trailing the Gunners by eight points having played a game more had they not engineered their remarkable turnaround against Spurs.
Now they will have the opportunity to move within two points of the leaders before Mikel Arteta's side next play, against Manchester United on Sunday, as they host Wolves earlier in the same day.
Arsenal's strong form this season has been in part due to the performances of two former City players in Oleksandr Zinchenko and Gabriel Jesus but Guardiola has no regrets about letting them go.
He said: "Always I say, 'Don't stay when you want to leave'. I wish the best for Gabriel and Oleks.
"They are fantastic people and they helped us a lot. Always I have big compliments and a big thank you for what they have done for us."