Bayern went into the mid-season break seven points clear at the top of the German top flight with a game in hand, having dropped just four points from 16 league matches so far.
Pep Guardiola's side are also in the last eight of the DFB-Pokal, where they will face Hamburg, and the last 16 of the Champions League when they will take on Arsenal as they aim to emulate last year's incredible treble success.
Despite their blistering form in the first half of the season, Lahm feels that he and his team-mates can continue to improve in the coming months.
"We're heading in the right direction but it can certainly get even better," he said.
"We need to dominate our opponents for the full 90 minutes in even more matches.
"We've eased off at times this season so far and let our opponents back into games. That can't be happening on a regular basis.
"We saw what's possible in our matches away to Manchester City and Bayer Leverkusen. We need more performances like those."
Bayern are currently on a record run of 41 league matches without defeat, stretching back to October 28, 2012, but Lahm insists they are not focusing on attempting to finish 2013-14 unbeaten.
"It's not something we're thinking about," he said.
"I know this is a cliche, but we're taking each game as it comes. Records are nice and we're happy to break them, but that's not our focus.
"Every team loses a match at some point. We'll try and keep our unbeaten run going as long as possible."
