"They passed the ball well and defensively, we didn't do that well," said Paatelainen.
"We need to get more organised. We need to be more solid and make sure that every player in the team does the job.
"At the end of the day it's a team performance and maybe that side of the game we need to get better."
The Finnish coach had no regrets over entering the tournament and believes Hibs lost out to a quality team.
"It was a very unfortunate goal because we were starting to get into the game," he said. "Elfsborg started very well and then we had a break, we might have scored, and after that it was a very heavy deflection and those ones are impossible for the goalkeeper.
"The boys fought very hard after that and created a couple of other chances.
"There's no mistake about it, Elfsborg are a quality team. They have excellent players, they are well organised, they play well as a team.
"We entered the competition to gain European experience and because we wanted competitive fixtures pre-season. We got that against a very good team - we'll learn a lot from this. We'll take a lot of positives from this and we'll learn from our mistakes as well.
"At this time of year it's very difficult for us because the boys have just had their summer break and trained two or three weeks.
"You can't just change your sandals to football shoes and start performing high-level football. You need about four or five matches before you're in full swing."