Carl's epiphany: the box business was going to shrink; software was going to become king; the carriers' traditional revenue would stagnate or worse. More recently, I heard much the same things from AT&T. It's now the common wisdom. Ten years ago, I didn't put all that together and I think few others did.
To decide the right moves, he started with the question "What will Calix's customers need in ten years?" His first conclusion was that the carriers would need to find massive new revenues. That would require extreme flexibility, including a network designed to satisfy new demands rapidly. With revenues flat to down, the carriers would need to cut costs drastically to stay profitable. Inevitably, that would squeeze their suppliers.
Russo decided the answer was agile software that brought carrier products to market quickly and allowed using less expensive standard hardware.