The All Blacks assistant coach was referring to the way in which his side struggled through the opening half in Auckland when it trailed 13-3 at the break, before storming back in the second period to seal a 22-16 victory.
The New Zealanders, who are the defending champions and will be bidding for a fifth consecutive title in 2009, are widely considered as third favourites to win this year's competition and Smith is hoping the character shown in the opening game will help the team.
"We were rusty as a team," he told reporters in Pretoria on Tuesday.
"It was certainly a good performance and special in terms of the heart, character and never-say-die spirit we showed.
"We stuck to a gameplan and the guys did well, showing passion. It was a step down the path and showed we're on the right track.
"We'll develop the game as we go along. There's no magic wand when it comes to developing players, you've just got to put in the hard work."
Smith also pointed to their performance in last year's competition when they trailed at half-time on several occasions, but fought back impressively to claim, sometimes, unexpected victories.
He continued: "Last year, the further we went the better we got. The focus was to mentally come back in a game.
"We did that several times last year and it certainly is a source of pride for the squad that the spirit is there."
However, Graham Henry's No.2 believes there is still plenty of work to do before the squad can reach the level expected by the coach.
He added: "We've got a way to go before we get to the quality of play we want and the margins are small at this level, consistency of performance is the challenge.
"We don't have a lot of options, so we just have to do the best we can. We'll take a lot of stuff forward from last week and we just trust that the players will recall it.
"We don't want to err by over-cooking the players."
Meanwhile, hooker Keven Mealamu, one of four players to have come through light training yesterday after sustaining minor injuries - the others being captain Richie McCaw, Conrad Smith (both thigh) and Isaac Ross (knee) - is relishing the prospect of facing the world champions.
He said: "We've never had an easy game against South Africa. I love coming here, there's nothing better than the crowds giving you a go and the huge stadiums.
"Games against South Africa are always very physical and very fast."