How should CEO's balance resources?

The chief executive officer role is unique in business, with most people receiving little practical training for the job. CEOs must balance all the competing needs, demands, and interests of constituents while moving the business forward. Nowhere is this more evident than in the need to provide the proper resources. You have to balance the capital and people needs of all the departments within your organization, allocating each at the right time for the company to be successful.
All executives have experience dealing with budgets and allocating resources. The difference is that the CEO has to balance resources between groups and items that are not all comparable. How much do we spend on marketing versus how much do we spend on rent? How do I balance between resources for sales and resources for product creation?
This story captures the dilemma faced by CEOs every day and is unique to the job. How do you compare two expenses that have almost no relation to each other? This allocation of resources between competing and dissimilar parts of the business is a great challenge.
For most executives, allocating resources is fairly simple, because you have a set of narrowly focused goals: If you are the Sales VP, you are trying to maximize revenue for a budgeted expense level. When you have to decide between two expenses, you choose the one that you think based upon your experience will generate the most revenue. While making the correct decision may be difficult, framing the problem is easy.
For the CEO, framing the problem is often not so easy. Is the goal of the company as a whole to maximize revenue or is a certain amount of profitability needed? Even if we simplify things and say that the goal of the company is to achieve long-term shareholder value, it is often unclear how that is best achieved. Different companies will have different answers to this question.
Know your Financial Goals
It is critical for the CEO to make a clear decision about what the financial goals of the company are and communicate those to every member of the team. This should include not only a one-year plan but also a high-level three to five-year plan that allows the team to understand the inevitable tradeoffs between growth and profitability.
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