Jack McConnell addressed the party's executive in Edinburgh
Scottish Labour leader Jack McConnell has called on the party to tackle the "chronic under-representation" of ethnic minorities as part of a strategy to deal with the country's new political climate.
He said the low turnout and the size of Labour's vote in the Scottish Parliament election sent out "clear signals".
He told the party's executive committee that governing parties would "wither away" if they did not constantly renew.
He said voter disaffection, and the appearance of new political forces, posed a real challenge to Scottish Labour.
"But we can and we will rise to the challenge because our values are Scotland's values, our mission is to create real opportunity for all and our party can listen, respond and adapt for a new era," argued Mr McConnell.
The Holyrood elections saw major gains for the Scottish Socialists and the Greens, who picked up six and seven seats respectively through the regional lists.
There were also notable successes for independent candidates in the 1 May poll.
Labour is again the largest party at Holyrood after winning 50 of the 129 seats, although this figure was down six on its 1999 showing.
The party's executive met in Edinburgh on Saturday to assess the election results and be brought up to date on the progress of the negotiations to form a power-sharing executive with the Liberal Democrats.
The two sides took a break from the formal coalition talks for a day while officials pulled together details of what has been agreed so far.
We must be seen to put the interests of those we represent before our own
It was expected that crime and local government would be on the agenda when those talks resumed on Sunday.
Mr McConnell told party members that Labour had to "develop and modernise" to deserve the support of the Scottish people.
"Labour representation in local and national government needs to reflect our values and the kind of society we wish to see in Scotland," he said.
"At all levels, we must be seen to put the interests of those we represent before our own."
Mr McConnell said the party had to respond to the new political climate at a constituency level.
"We won last week's difficult election by 'going local' - giving top priority to the very real concerns of working families in their community, and by campaigning at the heart of the community, not just in the national media," he said.
"Now we must take that strategy and 'go local' to renew the party too."
He has called on the party to agree five new proposals, including tackling the under-representation of ethnic minority communities.
Mr McConnell said Labour also had to attract new members, support its youth organisation, develop a campaigning style and organise local branches that are in "genuine dialogue" with local communities.