City manager Roberto Mancini expressed the notion at a news conference on Friday ahead of the big two squaring up for Sunday's showdown at Old Trafford.
City, who top the standings by two points from Manchester United, have spent more than 600 million pounds (US$957 million )building a team fit to rival Europe's finest, but getting the better of United remains the ultimate benchmark.
Mancini suggested the biggest step would be to match the mentality of the Old Trafford team.
He said: "United have one thing we don't have yet. When they play badly they win the game and we are missing this."
Mancini pointed to United's wins against Norwich City and Chelsea this season when their opponents had many chances and said: "They are strong enough that even when they don't play very well they win the game.
"The difference is psychological. When you win every year your mind works very hard even if you're not in good form or the team aren't in good form."
City have fallen victim to United's mental toughness in recent derby matches, losing five of their last eight encounters to late winning goals -- four in the 90th minute.
Last season at Old Trafford it took a spectacular 78th-minute bicycle kick by Wayne Rooney to divide the teams.
"We played well, they played well, the match was open till the end. Rooney scored an incredible goal," Mancini recalled.
City recorded a United-style victory in the Champions League on Tuesday, beating Spanish side Villarreal with a goal deep in stoppage time.
United manager Alex Ferguson believes they crossed a psychological barrier by winning the FA Cup last season - City's first major trophy since 1976. He told a news conference : "It was a turning point."
Manchester City's Sergio Aguero (L) celebrates his goal against Villarreal with Edin Dzeko during their Champions League Group A soccer match at the Etihad Stadium in Manchester, northern England October 18, 2011 (Photo: Reuters)
Mancini's view entering Sunday's game is that City have "reduced the gap" on their neighbors, but he suggested they still had plenty to do.
While United won their 19th league title in May -- their 12th under Ferguson -- City are involved in their first serious pursuit of the championship since the 1970s. They won the last of their two league titles back in 1968.
"They are the team that every year win something -- Premiership, Champions League, FA Cup," Mancini said.
"You have Manchester United, Barcelona, Real Madrid and you work to become like them, this should be our target," he added. "I don't know if it is impossible and in how many years we can do this but we want to become one of the top clubs in Europe."