I've thought about this question quite a bit as well (not very productively though), and these are basically my thoughts on it so far:

• the two extremes are most likely highly suboptimal, so it must indeed be a question of finding the right balance
• it "feels" like "doing a bit of both" is a sensible heuristic and trying to calculate this out more thoroughly may be overkill, as there are too many unknowns to get to any reliable solution
• but the above may also just be my laziness talking, as on the other hand, it also seems clear that shifting the balance a bit towards the optimum could easily increase your whole life's output by a few %. Thus it would absolutely make sense to spend, say, a week or so, thinking deeply about this and at least trying to find a good balance
• the answer likely isn't a ratio, but always depends on the concrete opportunities (especially as, as others have pointed out, few things fall strictly in one of the other category, but often it's a bit of both), which arise very often on the lower levels (e.g. "have this conversation or not" on a small level, "read this book" on a higher level) so it definitely make sense to follow some kind of heuristic for these cases
• on even higher levels, with decisions such as "take this job where I can learn a lot vs this job where I have direct impact", it certainly makes sense to not follow heuristics but investigate the concrete option(s) and estimate their effects on our personal development and impact
• delaying our own impact to the future always bears some risk of value drift changing our plans, nullifying our impact
• it's possible that the best way to learn how to have much impact is to try to have much impact, so optimizing for impact is the dominant strategy, but that certainly depends on the concrete cases and may be more true for the more high level decisions than low level ones, and is also only true if you get enough and quick enough feedback to actually evaluate your impact and correct your approach

So in a nutshell, I haven't in any way answered this for myself yet. I also haven't come up with a useful heuristic yet and mostly just follow my gut, possibly erring on the self development side so far, which makes sense as that part is comparably easy/rewarding/forgiving, whereas outside facing impact considerations have some risk of failure and much increased uncertainty. So I guess at least for myself "focus more on impactful projects and less on reading books" would be a useful heuristic and very likely lead me closer to the optimum balance.

This is a great question and one everyone struggles with.

TL;DR work on self improvement daily but be open to opportunities for acting now. My advice would indeed be to balance the two, but balance is not a 50-50 split. To be a top performer in anything you do, practice, practice, practice. The impact of a top performer can easily be 100x over the rest of us, so the effort put into self improvement pays off. Professional sports is a prime example, but research, engineering, academia, management, parenting, they all benefit from working on yourself.

The trap to avoid is not acting before you are perfect. Do not let opportunity for doing good slip you by. Your first job, relationship, child will all suffer from your inexperience, but how else do you gain experience? In truth, the more experience you gain the greater the challenges you will allow yourself to tackle, so being comfortable acting with some doubt of your ability is critical to great achievements.

More generally I think this is a question of what is sometimes called the explore/exploit trade-off: how much time to you spend building capacity compared to using that capacity, in cases where effort on those actions don't overlap.

In the real world there tends to be a lot of overlap, but there is always some marginal amount given up at any choice made along the explore/exploit Pareto frontier. So there's no one answer since it largely depends on what you are trying to achieve, other than to say you should look to expand the frontier wherever possible so you can get more of both.

I don't have much to add aside from what the other two responses have said except that I think it's possible to have opportunities that both develop the inner self and benefit others. I probably wouldn't endorse spending all your time on these activities, but looking out for them and prioritizing them seems like a good decision to me.

I don't think there's a One Right Answer or a one-size-fits-all approach, but I do think that using the comparative advantage framework may be helpful here.