Nick Kyrgios was knocked out by Kei Nishikori in the third round at Wimbledon on Saturday
The Australian has not managed to get beyond last-16 of a Grand Slam since making the quarter-finals at the Australian Open in 2015.
On Saturday, Krygios was knocked out by Kei Nishikori in the third round at Wimbledon, after losing 6-1, 7-6, 6-4.
“Nick is part of the next generation and the whole conversation but he will have to step it up,” said Philippoussis.
“He has got all the talent in the world, everyone knows that, but just having talent alone won’t get you there.
“It’s very important to improve other things – to get strong mentally and physically. Those are the two areas he would agree that he needs to improve.
“He needs to get on that pathway where he will be stronger, better and hungrier.”
Philippoussis believes Kyrgios, 23, should see fellow young tennis star Alexander Zverev as a role model.
The German is ranked number three in the world and has eight titles to his name.
“Zverev has the whole package,” added Philippoussis, 41.
“With his mind and work ethic, he’s the one I have my money on.
“Does Nick have the ability and the game? Absolutely. But there are other things.”
Meanwhile, Philippoussis was full of praise for 36-year-old Roger Federer, who is chasing his ninth Wimbledon title.
“It’s incredible that he’s still playing,” said the Australian on the 15th anniversary of his loss to the 20-time major winner in the 2003 Wimbledon final.
“I have so much respect for the guy in that he’s as hungry as ever.
“He wants to keep improving and that’s the sign of a true champion. He is just an incredible inspiration
“When he’s in trouble, he usually has four options. That’s the difference. Some other players may have two options; others just one.”