The Blues are preparing for their first game under Guus Hiddink this season following Jose Mourinho’s sacking earlier this month.
The Dutchman has been tasked with steering the west London side out of trouble after a disastrous start to Chelsea’s title defence left them languishing in 15th place, having lost nine of their opening 17 games.
Chelsea are looking to build on their 3-1 win over Sunderland at Stamford Bridge last weekend when they host the Hornets on Boxing Day.
And former Liverpool man Lawrenson is backing the Blues to secure a narrow victory at Stamford Bridge on Saturday afternoon.
Lawrenson told BBC Sport: “I thought the performance of the Chelsea players in the 3-1 home win against Sunderland last weekend was despicable. Why couldn’t they produce that under Jose Mourinho? I bet they have taken all the mirrors down in the Chelsea dressing room – then the players can’t take a long, hard look at themselves.
“I saw Watford in the first game of the season at Everton – I thought they were just a counter-attacking team who would get more points away than at home. But now it is getting much closer after three wins in their past four home matches.
“Watford have surprised everyone – but I think, post-Mourinho, it’s a completely different feeling at Chelsea.”
Despite their poor domestic form, Chelsea made it through to the last 16 of the Champions League as their group winners. The Blues will face Paris Saint-Germain in the knockout round next year.
MORE: Man United latest news
MORE: Arsenal latest news
MORE: Chelsea latest news
MORE: Liverpool latest news