Where do I start :

1. Lack of Leaders in the sqaud.
2. Teams have found out a way to play against city and Pep is not adapting.
4.Lack of clinical finishing in front of goal.(Sterling , Mahrez and Jesus all are poor finishers) https://twitter.com/KZN22_/status/1330858911394619396

5. Walker is not good enough as an attacking fullback (in my opinion a he gets a brain freeze as soon as gets into opposition half) .
6. Playing inverted wingers just doesn't work when both your full backs can't cross. (Cancelo can but at lb he has to switch to his right foot )

7. Playing Cancelo at LB instead of RB . Pep can play Ake at LB to solve the issue but he doesn't.
8. Pep's lack of faith in to start deserving youngsters like Ferran and Foden over out of form players like Mahrez (who looks fished this season) and Bernardo.

9.Rodri : He is too slow for the prem and takes ages to turn due to which he often gets his pockets picked from his blind side. To compensate for this , Pep has to play a double pivot instead of a 6 and two 8s (like in 2017-18).

Also, this pivot of Gundogan/Bernardo and Rodri is too slow and makes the team over dependent on KDB (as he is the sole no. 8 now)for creativity making it easier for opposition to mank mark him and stop city.

10. Sterling : Stats will tell you that he was very good last season, but this guy is one of the biggest bottlers in the game. He went missing for 5 months last season when the team required it the most and capped it of with his trademark open goal miss in the QF.

11.Pep
From his lack of faith in youth and his contant selection of his sons Sterling and Gundogan (irrespective of how they play) to him selecting idiotic lineups in big UCL games , he is not helping himself.
And to be honest, he didn't deserve the new contract.

And If you look at Pep's signings, you can see that most of them have been flops (as of now) or have not been value for money.

12. Finally , lack of sense in the market by the board(e.g: should have bought Partey instead of Rodri and should have replaced Kompany a year ago)

13.Hard luck with injuries.

From the outside, this team looks tired and devoid of ideas and may well finish outside top 4 .