She told a leadership hustings meeting in Edinburgh last night that one more push would not be enough for Labour to win again. She insisted a “radical transformation” was required.
Ms Dugdale, who faces Ken Macintosh in a head-to-head contest for the Scottish Labour leadership, said the party had to look and sound like the modern country it sought to govern.
Ms Dugdale said: “People need to get real about the scale of our defeat. Solid Labour majorities were transformed into huge SNP majorities in the tens of thousands. One last push just won’t do it.
“We can’t just expect everything to be put right if only we knock on a few more doors and speak to a few more people. Our defeat was years in the making and it will take years to fully recover from. Only a radical transformation of Scottish Labour will do the job.
“Only by looking and sounding like modern-day Scotland will we ever regain the trust of people in our country.
“Scotland is a modern, vibrant and outward-looking nation. Scottish Labour has to reflect that. We need people to look at our party and see a movement that reflects their lives. Now more than ever we need to pass on the baton to a new generation.”
But she said there was no need to rip up the manifesto. “Our policies were popular – we know that, the SNP took them.”
Mr Macintosh said under his leadership, Scottish Labour would take a new approach to local authority funding, working together with other parties to agree a long-term sustainable model.
He said: “John Swinney refers to the council tax freeze as a ‘partnership approach’ but local councillors have been forced to accept budgets drawn up and imposed from Holyrood while our local authorities shed jobs in their thousands and public services are stretched to breaking point.
“We need to give local councils more control including an alternative income stream to the council tax, such as the tax on alcohol offered by social responsibility levy.
“The council tax freeze has helped families through a difficult economic time but we should allow local people to decide for themselves whether they want it to continue or not.”
He said the SNP saw the council tax freeze as popular with voters. But he said: “Bribing people to make them like you is not a responsible way to run a government.”
The three deputy leadership candidates also took part in the hustings at the Apex International Hotel in the Grassmarket.
North East MSP Richard Baker said Labour could offer more ambition than the SNP on housing, health and education.
And he said the party would get a hearing from voters again by stepping up local campaigning. “Let us be on the front line in challenging Tory welfare cuts that will damage the most vulnerable in our society.”
Cowdenbeath MSP Alex Rowley said: “Unless we bring about radical change I believe we will see the demise of the Labour Party in Scotland.”
He said it was not a question of whether there would be another independence referendum, but when it would be and Labour could not be left in the position it had before. “Labour needs to lead a campaign from the front, not run from the referendum debate.”
Glasgow council leader Gordon Matheson said the party needed new blood and fresh ideas: “Turn in on ourselves and we are doomed; welcome radical ideas and new talent and we have a fighting chance.”