For me, the main thing that stood out was our lack of domination in midfield. You can discuss defensive errors, you can discuss lack of penetration but when there's absolutely nothing through midfield, you suffer at both ends and this is something that has been a weak point for years. We don't have an 'orchestrator' in the squad - I've banged on about it for a while but Coutinho isn't a deep orchestrator, Lucas obviously isn't, Henderson isn't, Milner certainly isn't, Allen isn't, Can's the closest but he definitely isn't either. It's one of the serious errors I felt Rodgers made in the transfer market - not seeking a player who could control a game from midfield. His preference was for players that weren't specialists at a particular skill or role, which is fine up to a point but unfortunately can easily transfer into bringing in players that don't particularly excel at anything.
As a result, in fixtures like these (and indeed, it's been the case in our last few games) where controlling the midfield and thereby (usually) controlling the game is so important, you can suffer against well organised teams. Both Newcastle and Watford also sought to be aggressive in midfield to try and stifle our play through the middle and 'break' off the deep players from the attack.
In this match in particular, we were truly atrocious in this area. Watford deserve credit for how compact and aggressive they were - they more or less played a 4-4-2/4-4-1-1 but the front six were narrow, with the wide players 'pinching in' and the front two helping the midfield to press as well and as such, even though on paper we had a numerical advantage in midfield, on the pitch we often had a numerical disadvantage.
This is where a midfield orchestrator can be so crucial. We needed to control the tempo of the game, not let Watford bring us down to their level with their speed and aggression and to try and push them back. This is where I feel we lost the match. Neither Lucas, Henderson or Can are proficient at retaining possession and dictating a game under pressure and as such we lost any kind of threat through the middle of the pitch. That made playing Firmino up front more or less pointless - poor as he may have been, playing him up front on his own basically requires you to have good association through midfield and we were completely unable to get any kind of domination in this area. Neither Lucas, Henderson or Can, who all started the game in CM, had above 75% passing accuracy by the end. When you also bear in mind that we had around 65% of the possession, the fact that neither Lallana (who managed 74 minutes) nor Coutinho (who was on the pitch for the whole game) managed to reach 30 successful passes is a pretty shocking statistic in itself and speaks volumes about how easy it was for Watford to completely disrupt play through the middle.
Without that domination in midfield, the obvious tactic would have been to go out-to-in - 'hollow' out the middle in the construction phase, have Henderson and Can split fairly wide, look for dynamic play on the flanks and then quickly attack the space between the lines. The option to go direct wasn't initially there without Benteke or Origi so a plan like this would have made sense. The issue was the execution. There were plenty of switches to Moreno, who often had space on the left because of Watford's narrowness, but this led to nothing - there was no real dynamic or understanding between him, Coutinho and Can and on the other side, Clyne looked mentally fatigued, and had absolutely no relationship with Lallana at all. As such, the attack was more or less limited in the first half to switching play to Moreno in space, him playing it to Coutinho or Can inside and hoping that they would do something. Indeed, three of the four highest passing combinations involved Moreno and nothing really came of this. When you add in Sakho's abysmal second half performance then all you're left with is a team without control over a game (despite it's possession), without penetration, without partnerships or combinations and one that simply fails to bring its attacking threats into the match. When it's like that, all you can hope for is that they make as few a mistakes as possible and obviously that didn't happen either.