The Gunners face a fight to finish in the top four as they currently find themselves in fifth spot in the Premier League table.
Arsenal crashed out of the Champions League in midweek on away goals despite an impressive 2-0 win over Bayern Munich and Walcott believes their performance in Germany shows they have underperformed this term.
"We want to be at places like Bayern Munich again, it would be a tragedy for this team not to be in the Champions League," Walcott told The Sunday Mirror.
"The way we played in Germany shows how much we have underperformed at times this season. It's been up and down. For the big occasions we tend to turn up it's just very frustrating."
Walcott admits Arsenal have lacked leadership on the pitch in some games this season and he has called on them to build on their win over Bayern for the rest of the season.
"We had a lot of leaders in Germany, telling people what to do," added Walcott. "There was more communication than there has been previously.
"We have definitely been too quiet, we've been afraid to tell each other what to do even to tell each other off.
"Now we need to show a bit more of that, like we did in Germany. We don't need to always have a go at each other, but we have to speak hard truths.
"We care, we want to prove we want to win and show the desire and commitment. We need to show it to each other and maybe sometimes the referee as well."
Premier League Top 4 Finish 12/13 Top 4 Finish: Arsenal 4/11
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