After a season of transition in 2021, the Giants are competing on both fronts this year.
While the immediate focus is on tomorrow's Elland Road date with Hull KR, Huddersfield are primed for a title challenge in Super League after finishing the opening 11 rounds in fifth spot.
Watson has been encouraged by his side's progress as he looks to guide the Giants to their first Challenge Cup final since 2009.
"It'd be massive for us," he told The Yorkshire Post.
"I came to Huddersfield to try and compete at the top end and build a team that can consistently compete at the top end. I feel we're going in the right direction.
"It's happened fairly quickly to get to a semi-final but that's down to the hard work the players have put in so far. They've deserved the rewards they've got.
"Hopefully we can go one better on the weekend and get to a Challenge Cup final."
Huddersfield are virtually at full strength for the semi-final with Will Pryce, Matty English and Jack Cogger the only absentees.
Boosted by the return of Tui Lolohea, Jermaine McGillvary, Chris Hill and Sebastine Ikahihifo, Watson has backed his experienced heads to lead the way on the big stage.
"It's about having the right level of composure as a team, playing to your processes and not getting caught up in the atmosphere and the emotion of it," said the Giants head coach.
"You've got to keep a cool head. Your big players will step up and guide you. Those players are really important to how the result goes.
"We need to treat it like another game even if it is a bigger stage and a bigger carrot at the end of it.
"What we've been good at is sticking to our processes and doing our jobs well for each other. If the players can continue to do that, we will be successful."
Standing in Huddersfield's way are Hull KR, a team that have been on a similar journey under Tony Smith.
While Watson respects Rovers, he believes they should be more concerned about the Giants.
"It's a big challenge," said Watson.
"They've got strengths all over the board. You look at the spine and the edges with Shaun Kenny-Dowall and Ryan Hall - they've got good international players out there.
"The big key for us is to make sure we focus on what we're good at. We don't want to overly focus on them; let them worry about us."
Watson has positive memories of his previous semi-final experience in 2020 when he guided Salford to a shock win over holders Warrington Wolves.
After coming up just short against Leeds Rhinos at an empty Wembley, Watson is excited about the prospect of doing it all again in front of a full house at Tottenham Hotspur Stadium on May 28.
"It was a weird one because there was no crowd but the game was so intense," he said.
"It could have gone either way. Hopefully this time we can get to the final and do a job there and win it.
"This is what you're involved in the game for. You want to be part of the showcase events.
"You don't want to be sat at home watching them; you want to either be playing or coaching in them. I'm no different."