It's Time for CFOs to Get Strategic About Resource Allocation
Anders Liu-Lindberg
Leading advisor to senior Finance and FP&A leaders on creating impact through business partnering | Interim | VP Finance | Business Finance
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Capital allocation is one of the most critical responsibilities of a CFO. Yet, organizations often fail to reallocate resources dynamically, allowing underperforming business units, legacy investments, and outdated initiatives to consume capital that could be better deployed elsewhere. Research by McKinsey shows that high-performing companies reallocate at least 50% of their invested capital over ten years, systematically shifting resources to high-growth areas.
For CFOs, the challenge is cutting costs and ensuring that capital, talent, and technology are continuously redirected toward the business areas that offer the most promise. A structured and strategic approach to resource reallocation ensures that companies remain competitive, agile, and well-positioned for future growth.
Why CFOs Must Lead the Charge in Resource Reallocation
Many companies fall into the trap of incremental budgeting, where last year’s resource allocation becomes the baseline for the next cycle. This often leads to stagnation and inefficiency, as resources remain locked in declining business areas while emerging opportunities go unfunded. A more proactive approach, where resources are continuously assessed and reallocated, is essential for driving sustainable growth.
CFOs have a unique vantage point across all business units and functions, making them best suited to lead strategic resource allocation. By championing a more dynamic reallocation strategy, CFOs can:
It’s hard to imagine other CXO roles taking the lead as capital allocation naturally falls to the CFO, and so should the reallocation of capital over time.
A Framework for Dynamic Resource Reallocation
A structured approach to resource reallocation helps CFOs systematically assess where capital is being deployed and ensure it is continuously optimized. The following framework provides a roadmap for CFOs to implement a disciplined reallocation strategy:
1. Assess Current Allocation and Performance
2. Reallocate Capital to High-Growth Opportunities
3. Optimize Workforce and Operational Efficiency
4. Enhance Capital Expenditure (CapEx) and Technology Investments
By embedding these principles into the organization’s financial planning process, CFOs can ensure that resources are allocated based on future potential rather than past precedents. This enhances efficiency and enables businesses to capture new growth opportunities before competitors.
Overcoming Organizational Barriers to Reallocation
Despite the clear benefits of resource reallocation, many companies struggle with execution due to internal resistance, lack of visibility, and an ingrained preference for maintaining the status quo. CFOs must proactively address these challenges to ensure successful implementation.
One of the biggest hurdles is organizational inertia, where teams and business units resist change due to historical investments or internal politics. CFOs must foster a culture of continuous assessment, where reallocation is seen not as a cost-cutting exercise but as an opportunity to invest in the company’s future. Transparent communication and cross-functional collaboration are critical in gaining buy-in for reallocation efforts.
Another common challenge is limited visibility into resource utilization. Many organizations lack real-time data and analytics to make informed allocation decisions. CFOs should invest in technology solutions that provide continuous insights into financial performance, enabling more dynamic and responsive capital allocation.
Finally, balancing short-term financial pressures with long-term strategic goals can make reallocation difficult. CFOs must work closely with executive leadership to ensure that investment decisions are made with a long-term perspective while still meeting short-term financial objectives.
The CFO’s Role in Driving Resource Reallocation at Scale
To institutionalize dynamic resource reallocation, CFOs must embed it as a continuous process rather than a one-time initiative. This requires a shift in mindset—from viewing budgeting as a static annual exercise to treating it as an ongoing strategic function. CFOs should:
By taking these steps, CFOs can create an agile and future-proof financial model that ensures capital is consistently directed toward the company’s most promising opportunities.
Unlocking the Next Phase of Growth
Resource reallocation is not just about cutting costs; it’s about ensuring that every dollar works toward the company’s strategic ambitions. High-performing organizations understand that capital must flow toward innovation, market expansion, and technological advancement rather than being trapped in legacy business models.
CFOs who lead this charge will position their companies for long-term success by creating a culture of continuous reinvestment. By reallocating at least 50% of invested capital over a decade, organizations can maintain growth momentum, adapt to changing markets, and sustain competitive advantage.
Ultimately, the companies that thrive proactively reshape their investment strategies to align with the future. CFOs have a unique opportunity to drive this transformation, ensuring that resource allocation remains a dynamic, strategic function that fuels sustained growth and profitability. Do you have a dynamic and aggressive resource (re)allocation in your company?
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Anders Liu-Lindberg is the co-founder and a partner at Business Partnering Institute and the owner of the largest group dedicated to Finance Business Partnering on LinkedIn, which has more than 12,000 members. I have ten years of experience as a business partner at the global transport and logistics company Maersk. I am the co-author of the books “Create Value as a Finance Business Partner” and "Communicating Financials to Executives," a long-time Finance Blogger, a LinkedIn Learning instructor, and a Top Voice on LinkedIn with 400,000+ followers.
Financial Accountant S&A ACCOUNTING SERVICES CC
3 小时前This is a great Initiative. It shows where we can reap the benefits on Lucrative Business Opportunities by applying our minds correctly. By strategizing our Capex Distribution we make significant inroads at our Companies. Well Done Anders.
FCA, ACCA, CISA, MBA(LBS)
3 小时前Yeah right! Very important, yet less discussed.
Director at Evolve Advisors
5 小时前Very insightful article Anders and well articulated
Experienced AU Bookkeeper I Real Estate Bookkeeper I Helping Real Estate Owners by providing flexible solutions, and ensuring regulatory compliance through specialized bookkeeping assistance.
7 小时前This is fantastic to read. It’s essential for CFOs not only to cut costs but also to ensure that capital is being used to drive growth and innovation. In today’s fast-paced business environment, the ability to adapt quickly can make all the difference. I appreciate the emphasis on aligning resources with strategic priorities and fostering a culture of continuous assessment, as these are key to staying competitive.
This is an essential discussion, Anders. Your insights on strategic resource allocation are invaluable for CFOs looking to enhance their impact. I'm excited to see how your new book will guide leaders in making informed decisions. #DeepioticsAcademy