Yes I think the club made a mistake here and it's down to Pep's belief that, having played under Bielsa (and probably having spoken to Bielsa about him), Phillips had the ability to be a top DM for us.
What I would say though, is playing the DM role for City is probably the hardest position. Firstly you've got a manager who played there. Secondly, it's critical to how we perform both with and without the ball. Rodri was slated for about 18months, with this forum full of potential replacements. He wasn't a patch on Fernandinho. Now, he's one of about three who are consistently performing to a high standard.
I'd still expect way more of Phillips. He wasn't in the right positions to receive the ball, he doesn't seem to grasp that he should be on the ball more than anyone else. It was noticeable how easier Gundogan was able to link up in attacking areas once Rodri came on last night. He sits in space to receive the ball and dictate play, whereas Kalvin was stood parallel but marked out as an option.
It's easy for a DM to look good elsewhere when all they have to do is win the ball back and marshal the defence. That's a small part of the role for City. They need to have a full picture in their head. They need to be picking it up with their back to goal from a goalkeeper, under pressure. They need to always be in a position to receive the ball to enable our attacking players to get it in attacking areas. They need to be on the front foot, reading the game to win it back.
But is Phillips anymore capable than Lavia at doing that? I'm not sure. And he'll be about 28 before he gets anywhere close to performing to a decent level, whereas Lavia would be 20!