The Blancos struggled to create chances during the Bernabeu clash and the Italian feels a lack of urgency cost them in the end.
"We were slow in attack. We didn't have a good game. We have to recover and improve," he told reporters after the game.
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"We must improve a lot of things including our attitude and confidence. I have faith in my players. The problem is not our style of play; it's with our pace."
Despite his disappointment with his team and their performance, the former Chelsea and AC Milan coach was full of praise for Atletico.
"Atletico Madrid deserved to win the game. They were organised and solid in defence. I think Atletico are a very solid team with a lot of quality. They can compete for the league title."
Meanwhile, Madrid defender Sergio Ramos believes his side are still in contention for the Liga title this term.
"We have to keep working hard to win as many titles as possible. The important thing is how the season ends, not how it starts.
"When you do not win and things do not go how you wanted you have to reflect and take something out of the match.
"You cannot live in the past, you have to show every day that the team that makes fewer mistakes takes the win."