Roberto Mancini believes Manchester City are now "very close" to matching the standards set by Premier League rivals Manchester United.
The Blues came unstuck in the latest derby meeting between the pair, with a 2-1 defeat suffered at Old Trafford on Saturday.
Mancini feels City were unfortunate to come out of that contest second best, though, with United requiring a wonder strike from Wayne Rooney to take the spoils.
The Premier League title looks set to elude City this season, with eight points now separating them from the Red Devils, but their coach is confident the club are heading in the right direction.
"We are very close to United now, very close," said Mancini.
"In the five derbies I have been involved in, there is only one time when we didn't deserve to win.
"And again, we didn't deserve to lose this one. But United are this much ahead [holds two fingers narrowly apart] of us and the other teams. Just by this much. It's very close.
"We should improve. I have been saying this for six months but, if we come here and play like this against United, then we will be okay. I am very proud of my players and I have told them this. I think we have the right character.
"After we equalised, I thought we could go on and win. United didn't play well in the second-half but Rooney's goal changed the game. This is the mentality that comes when you have been winning things for a long time.
"We can change this though, because we have changed a lot and improved a lot as a team. I think we need to win one cup or one title because, if we do, then we can change the whole mentality of the team."