Real Madrid sacked Lopetegui as manager last month just 24 hours after the club had been thumped by Barcelona in El Clasico.
The Spaniard, who left his post as manager of the national team on the eve of the World Cup in Russia, was appointed as Zinedine Zidane’s successor back in June.
However, with Real Madrid stuck in a rut, the La Liga giants opted to relieve him of his duties following a dismal four-month stint.
Santiago Solari has been placed in charge since, winning his first three games.
And Balague believes Real made a big mistake by going for Lopetegui because he was a manager made in the same mould of Barcelona icon Johan Cruyff.
Cruyff, all these years on, remains the benchmark for every Barcelona boss.
And Balague told BBC Sport: “Lopetegui is of the Johan Cruyff school of management, and he wants his teams to always play in a certain style, whereas Madrid over recent years have been much more about improvisation, leaving quality players to do the rest.
“It was perhaps a mistake for Madrid to choose him, because Lopetegui was not going to change.
“Solari has realised that you have to open the doors, let all of the tension out.
“He has allowed the players to forget responsibilities and obligations and express themselves.
“He has gone back to the Zidane style: go out and enjoy yourselves.
“Karim Benzema, Alvaro Odriozola, Casemiro, Dani Ceballos have all already been affected positively by the change and have said he should stay. ‘We would kill for him,’ they said.
“And Gareth Bale is scoring, which will give him the confidence he really needs.”
Solari, meanwhile, is relaxed over his Real Madrid future.
The interim Los Blancos boss said: “I can only think about the next game.
“Like I said before, I can only see the next link in the chain. I don’t think that’s wrong.
“Football is an immediate game, so the most important thing is the next game.
“Before today [against Viktoria Plzen], the most important game was this one.
“We passed very well and the players were fantastic. From now, the most important game is the next one. It’s a cliche, but that’s how it is.
“We must be focused and recover from this game so we can focus on the weekend’s game.”