The Chief Transformation Officer: Architect of Creative Destruction

What economist and Nobel laureate Philippe Aghion teaches us about creative destruction in the age of artificial intelligence explains why organizations need to appoint a Chief Transformation Officer.

Philippe Aghion is one of the most influential economists of our time. A professor at the Collège de France, the London School of Economics, and INSERM, he has devoted thirty years of research to an idea as simple as it is unsettling: prosperity arises from destruction. His work, developed with Peter Howitt since their seminal 1992 article and later synthesized in The Power of Creative Destruction (2020, with Céline Antonin and Simon Bunel), demonstrates that innovation does not politely add itself to existing structures. It shatters them. And it is precisely this process of replacement - new entrants destroying the rents of incumbents - that generates growth.

This Schumpeterian theory of growth rests on three fundamental mechanisms. First, innovation operates through substitution, not accumulation: each technological breakthrough replaces what existed with something qualitatively superior. Second, established firms are structurally ill-positioned to innovate radically, because true innovation cannibalizes their own revenues - this is the famous incumbent’s dilemma. Finally, and this is Aghion’s most crucial point, institutions determine whether destruction creates or merely destroys. Without appropriate regulation, without training, without proper governance, destruction remains... destruction.

AI: The most powerful force of creative destruction since the advent of electricity

Let’s now apply this theoretical framework to artificial intelligence. AI is not just another software tool. It is an agent of creative destruction of unprecedented power.

AI will eliminate entire segments of value chains. Not just isolated tasks - but entire value-creation frameworks. Legal analysis, financial diagnostics, customer service, content creation, code generation, medical imaging: these activities are not merely “augmented” by AI. They are fundamentally rebuilt according to an AI-native logic.

But at the same time, AI will create value that does not yet exist. Just as the disruption of the horse-based economy made modern urbanization, mass tourism, and global supply chains possible, AI-driven disruption will open up economic possibilities we cannot yet fully imagine: personalized medicine on a massive scale, autonomous scientific discovery, and real-time adaptive supply chains.

The net result will be positive. But the transition may be difficult. Aghion is unequivocal on this point: the phase of destruction is real, painful, and unevenly distributed. The phase of creation requires deliberate institutional design.

The Chief Transformation Officer: Architect of Creative Destruction

This is where theory collides with the reality of organizations. If Aghion’s framework is correct - and three decades of empirical validation suggest that it is - then every large organization needs a role explicitly dedicated to steering the destruction-creation cycle. That role is that of the Chief Transformation Officer.

And its mandate is not to “manage change.” Change management involves transitions between known states. What AI requires is fundamentally different: the deliberate dismantling of profitable but doomed processes, and the simultaneous construction of entirely new ones - often before the old ones have visibly failed.

In practical terms, the CTO must identify what needs to be dismantled - conducting a clear-eyed audit of processes, roles, and business models that are structurally vulnerable to AI. He must build the new before the old collapses, creating parallel AI-native structures that temporarily coexist with the legacy systems. They must redesign the human architecture: skills, roles, performance metrics, and culture - because, as Aghion argues, it is institutions that determine whether disruption creates value or chaos. Finally, they must protect the organization from itself, as every manager whose scope of responsibility is threatened will naturally resist change.

Refusing to destroy is the worst strategy

Aghion’s message is uncomfortable but liberating: we cannot innovate for the future without dismantling parts of the present. Organizations that try to “add AI” to their existing structures without fundamentally rethinking them will be overtaken by those that have learned the lesson.

The role of AI in the economy is not incremental improvement. It is Schumpeterian creative destruction at an unprecedented speed and scale. The organizations that will thrive are those that deliberately embrace this destruction, with a CTO who has a clear mandate - someone who understands that the most valuable thing they can do is strategically break what still works.

For in Aghion’s world, the only thing more dangerous than destruction is the refusal to destroy.