Wales clinched the Six Nations title after securing a 30-3 over their starstruck opponents, who had hoped to make the Grand Slam themselves.
Woodward told BBC Radio 5 Live's Sportsweek show: "England were found out …. their bubble has been burst."
England needed to beat Wales in order to claim the Grand Slam, having previously recorded an impressive 38-21 against New Zealand in November.
This was not the case as they were demolished by a rampant Welsh outfit, who retained their Six Nations title as a result.
"Wales were absolutely fantastic, man for man they were better," added Woodward.
"England had a good Six Nations but when it really came to it, man-for-man, they were not as good as Wales. It was a bad day, but this is a young team, they have to grieve for a few days and then get back on the horse and come back better.
"They are building a team for 2015. It is a young pack but the way Adam Jones and Gethin Jenkins tore into the England front row was the difference. It was a huge learning experience for the players and the coaching team."
Despite Woodward's disappointment, he praised the work Stuart Lancaster has done since taking charge in January of 2012 but has warned he must learn lessons from the defeat.
"You have to grieve, look in the mirror and then get back out there," he said. "He has done a great job, took over at a difficult time but he will learn from it."