The rising Tory star tipped as a future Prime Minister has urged his party to stop "navel gazing" if it wants to regain its former Midland strongholds.
Shadow Chancellor George Osborne admitted the Conservative Party had "not got it right" and had been obsessed with internal feuding.
But the 34-year-old denied they were too out of touch to reclaim seats outside rural areas and the South-east.
He highlighted the priority of regaining Solihull which went to the Lib Dems' Lorely Burt in one of the shock results at the last General Election.
It was the first Tory defeat in the constituency since it was formed in 1945 and Mr Osborne said: "I think this was a shock. We had not expected to lose Solihull. But across the country we took more seats off the Liberal Democrats than they took off us. But we have got to learn the lessons of that. We have got to listen to the people of Solihull.
"Our candidate Maggie Throup is the first Tory candidate to be selected in the whole country which shows how serious we are about the Solihull seat."
Mr Osborne said three consecutive General Election losses and the pending contest to succeed Tory leader Michael Howard would force the Tories to re-evaluate policies.
He also pinpointed the need to make inroads in major cities like Birmingham and said that process had already started.
"I am in a northern constituency and there are not many Conservatives in northern constituencies," he said.
"But, obviously, a key to any kind of revival is winning ground in urban areas and we are doing that by winning back local councils. Birmingham is a good example of this - a council with a Conservative leader. We will transform that into parliamentary seats and then the party will stop looking like a party solely for the Southeast and rural areas."
Mr Osborne was speaking to The Birmingham Post in Solihull before he addressed party members. He said the Tories would prove to the electorate that the party "understands the country as it is and not as it was".
He said: "If we celebrate our country as it is now rather than attempting to turn the clock back, then we have a great opportunity of showing that the Conservative Party is in touch."
Tory policies should not be "a list of angry grievances" if the party wanted to be a credible alternative, he said.
"People rejected Labour at the last election. They got the lowest share of the vote of any party winning an election - yet people did not come over to the Conservatives," he added.
"We point to the mistakes of Labour but we must also look at ourselves because we have obviously not got it right because we did not win.
"My criticism of the Conservative Party is that we are too obsessed with ourselves and we are too guilty of navel gazing. We should be in touch with the local communities, like Maggie or Caroline (Spelman, Tory MP for Meriden). That for me is what modernising is about."
Mr Osborne said he did not put his name forward for the leadership contest because he had a "big enough job" shadowing Gordon Brown.
He confirmed his support for David Cameron in the party leadership battle but rejected comparisons between the two Tory young hopefuls and Tony Blair and Gordon Brown in the early 1990s.
He said: "First of all we get on with each other. Secondly, we do not have to ditch everything we believe in to get our party elected."
Mr Osborne and Mr Cameron are among a breed of modern Tories who have been labelled the 'Notting Hill set'.