The Blues sit ten points behind Man City in the Premier League table but they have the chance to close the gap when they face Pep Guardiola's side this weekend.
A number of Chelsea stars came in for some stern criticism after goals from Raul Jimenez and Diogo Jota handed the Blues their second defeat in three games.
The Chelsea boss was incensed after seeing his side blow a comfortable lead and Sarri says his side's inconsistent form is because they have a tendency to switch off.
He said: "I think we have a problem to manage the match at the moment, we have played well for 55 minutes but then in the first difficulty we had a blackout.
"We were a little unlucky, because the opponents only had two on target. We were not able to react.
"I have seen in the last matches we didn’t react as a team or 11 players, so it is a big problem.
"We need a leader and a collective target can give us determination. In some matches, we have lacked it, like in the last match.
"I know that we started with 30 points of difference, we have to work to reduce the gap. I think we are improving, but they are improving also. I don’t know the difference at the moment.
"We started the season well, but we have had some difficulties in a new way of playing. It is normal, we have to work and solve it day by day and improve.
Maurizio Sarri will be facing Pep Guardiola for the first time in English football after the two squared off in the Champions League group stage last season.
Sarri's Napoli side lost both fixtures home and away and the Blues boss believes Pep's rampant Manchester City are the best team in Europe.
"Against Guardiola I have lost every match, so you have to ask someone else (how to beat them).
"At the moment they are stronger than us, but our final target is to be the best in Europe. Anything can happen and we have to believe in it.
Despite his manager's sentiments, star man Eden Hazard recently hailed the current league leaders as the Belgian playmaker grows increasingly disillusioned at Chelsea.
Hazard said: “I think City find more solutions in their play than we do.
“The only thing they don’t have is Eden Hazard! That is the difference.”
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