Gatland's young Welsh team are on an eight-game losing streak after crashing 25-16 in the first Test at Sydney, with their job getting harder after experienced No. 8 Aaron Wainwright and winger Josh Hathaway were both ruled out injured.
Wainwright, who has 50 caps, was the best Wales performer last week but tore a hamstring in the dying stages, while Hathaway suffered an elbow injury.
"This week, we've been going through our processes, building on what worked well and sharpening the areas that need improvement," said Gatland.
"We expect Australia to go up another level this weekend and we know we need to as well."
Wales lost the breakdown battle and conceded 11 penalties in the first Test, six in their own half, and the New Zealander wants to see improvements.
"We want to start well and make sure we are disciplined and accurate from the off. Then it's about keeping in the arm-wrestle for the duration," he said.
Wales are desperate for a win having last tasted a Test victory against minnows Georgia in the pool stages of the 2023 World Cup.
They have not won a Test in Australia since 1969.
Another defeat would edge them closer to the record run of 10 losses in 2002 and 2003 when another New Zealander, Steve Hansen, was the coach.
Veteran fullback Liam Williams and prop Gareth Thomas were both declared fit after suffering knocks in Sydney.
With Wainwright out, Taine Plumtree will move to No. 8 with James Botham, grandson of England cricket great Ian Botham, coming into the starting line-up at blindside flanker and Tommy Reffell at openside.
Cameron Winnett was named at full-back after being overlooked for Sydney, with Williams moving to the wing alongside Rio Dyer.
Quiet resolve
Australia have their own injury worries with new captain Liam Wright out after just one Test in charge with a shoulder problem.
Veteran prop James Slipper will don the armband in his 136th Test, with Charlie Cale elevated for a starting debut at No.8 and Rob Valetini pushed to blindside flanker to replace Wright.
It is the lone change to the starting side, although there are several new faces on the bench with Queensland Reds' hooker Josh Nasser, the son of former Wallaby Brendan Nasser, in line for a potential debut.
Coach Joe Schmidt, who took over from Eddie Jones this year, said it was frustrating losing Wright, but Slipper had "fantastic experience".
"It's that quiet leadership that we'll need and the quiet resolve he brings to his work will hopefully ripple through the team," he said, adding that he was "pragmatic" about his winning start in Sydney.
"Three tries to one looks good on paper and I loved the three tries we got which were all varied," he said.
"But at the back end of the game I think we made 68 tackles in the last 10-12 minutes.
"We don't want to be tackling that long against a Welsh side that are coming in waves. We've got to get a little bit more pressure on the ball."
Australia (15-1)
Tom Wright; Andrew Kellaway, Josh Flook, Hunter Paisami, Filipo Daugunu; Noah Lolesio, Jake Gordon; Charlie Cale, Fraser McReight, Rob Valetini; Lukhan Salakaia-Loto, Jeremy Williams; Taniela Tupou, Matt Faessler, James Slipper (capt)
Replacements: Josh Nasser, Isaac Kailea, Allan Alaalatoa, Angus Blyth, Langi Gleeson, Nic White, Ben Donaldson, Dylan Pietsch
Wales (15-1)
Cameron Winnett; Liam Williams, Owen Watkin, Mason Grady, Rio Dyer; Ben Thomas, Ellis Bevan; Taine Plumtree, Tommy Reffell, James Botham; Dafydd Jenkins, Christ Tshiunza; Archie Griffin, Dewi Lake (capt), Gareth Thomas
Replacements: Evan Lloyd, Kemsley Mathias, Harri O'Connor, Cory Hill, Mackenzie Martin, Kieran Hardy, Sam Costelow, Nick Tompkins
