why gorvashev institute his reform?

Answer 1

This is my understanding, but I have never read a Russian or a Soviet analysis:

As Mr. Gorbachev became familiar with the dynamics of his own government's functions and the relationship that government had with the US in the rivalry known as the "cold war", he realized that to improve the functioning of the Russian society it would be necessary to "turn down" the worldwide military-based tension. He also realized that it was a worldwide rivalry that was based primarily upon false perceptions of endangerment. Each side in the "cold war" believed a powerful military was a necessary defensive posture. A better understanding was that a unilateral "stand down" would go far in lessening tensions and danger.
A very important beneficial side-effect for the Russian society is that resources would be liberated for the betterment of the people. Russia, through the political structure of the USSR, had expended much effort in the management and manipulation of many eastern European states without very much benefit to show for it. There was also much resentment built up in the population of those states to the economic and military domination of the USSR. All this discontent was realized by Gorbachev to be an unfortunate waste of "political capital": a loss of diplomatic opportunity to be friends with neighboring states, allied for mutual economic benefit without fear and with mutual respect. This is the moral and practical foundation of the CIS, which in some respects, replaces the USSR.
By also reducing the role of the Communist Party and its soviet ruling structure in the government of Russia, Gorbachev saw an opportunity to implement one of the greatest tools of democracy, government by the people, and Mr. Gorbachev seems to have made that possible for his successors. I think this was the most fundamental of all the reforms of Perestroika, and by the dissolution of the USSR, it insured that Russia's new political path would be independent of, and unhampered by, the tight but pervasive controls over the other member states of the USSR. .
In many ways this bold move by M.Gorbachev more than matched the challenge presented by the rivalry of the US under the leadership of R.Reagan.

(I'm American, an adult during Gorbachev's term of office.)

Answer 2

His reform went insane, so he had to have it institutionalized.