He's not done as badly as you suggest. Remember, Leo Messi was injured for a good 2 months, and yet you find yourself at the top of La Liga, in the quarters of the Copa, and in the Ro16 of the CL. That's good progress.
But for your criticism, I agree.
Your defense is crap. Let's admit that. If not for Valdes making some terrific saves, Atletico would be 1st and Real would be 2nd. Valdes may have cost Barcelona plenty of times in the past, but he's saved your ass countless times this season, and is showing that you might just miss him after all.
Your midfield is stacked, even without Thiago. Your offense is picture perfect as well. The problem is the playing style. Martino insists on playing a style that resembles a mixture of possession and counter-attacking. That's not going to work. It's not that the playing style is bad, no. Real Madrid are finally finding their groove with the exact same style. The problem is the set of players. Martino has a set of fairly short, but tricky players. They're not the "big" type to slam into other players to win the ball back, and neither do they pose much of a threat inside the box when a cross comes in. Therefore, this "box-to-box" style is not ideal for the likes of Xavi, Iniesta, and Messi. They fit in perfectly with the "tiki-taka" system. That's what I feel Martino should stick to. He should stick to tiki-taka, and slowly adapt it and change it as his players change. Not the other way around (he shouldn't force his players to play a different style from what they're used to playing. He should create a playing style based on his players' abilities).
There's a reason Guardiola was able to win so much in just 4 years. He had a playing style that he knew fit in with his players perfectly, and added/removed other players to adjust with it. He bought Ibrahimovic, but realized that Ibra wasn't the "ideal" Barca striker, so tried out David Villa instead, who worked out perfectly until his broken leg. THAT'S what Martino should try. Then he'll be very successful.
What is wrong with the guy? He always puts on a horrible lineup and barely wins the game. He never plays a full strength squad and gives way too much time for the youngsters at such wrong timing. Today's lineup vs Levante is:
Pinto
Alves - Bartra - Puyol - Adriano
S. Roberto - Song - Xavi
Pedro - Messi - Tello
& Guess what? We are down 1-0 at halftime. Our defense is so average, Puyol just got back from injury and he's already starting. No Mascherano and no Pique starting. Our midfield is horrible, also very average. No Cesc and no Busquets starting (Iniesta injured). Also Tello starting over Sanchez with this average lineup? I'm not saying he should play the full strength squad, but this is the weakest squad we have available, except for Messi. Messi can't do it all on his own. This lineup can lose to any team in the world and we already drew with the same team a few days ago...
EDIT: no surprise that we are losing due to a set piece. Our entire squad is full of flimsy midgets but he still did not buy a tall, strong CB this month. He had the audacity to say that "the third CB everyone is waiting for is Puyol coming back from injury." Like, cmon...