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It is correct to recognize that every enterprise has a development process from small to large, from weak to strong. Enterprise management is also a gradual process from shallow to deep, from extensive management to refined management.

The first sign of standardized enterprise management is institutionalized management. Many managers of small and medium-sized enterprises understand institutionalization as simply establishing a pile of management systems. Such an understanding is too one-sided. Institutionalization is not only about establishing a complete enterprise management system; the most important thing is to establish an institutional platform to ensure the implementation of management measures and the standardization of employee behavior.

Institutionalized management is the initial stage of enterprise management and also the foundation of enterprise management. Anyone who wants to become strong and large must first establish a complete and sound set of rules and regulations. For example, Qin King Ying Zheng adopted the legalist ideas of Li Si and unified the six states; Liu Bang, the first emperor of the Han Dynasty, revolted and made a three-point agreement with the people, which laid the foundation for the 400-year Han Dynasty. This shows the great role of institutions!

In the world-famous West Point Military Academy, there is a widely praised tradition. When cadets encounter officers' questions, they can only answer in four ways: "Yes, sir," "No, sir," "I don't know, sir," and "I have no excuse, sir." Apart from these, they cannot say an extra word. This is the institution. The strict system and management of West Point have forged its reputation as the world's number one military academy.

In China, the phenomenon of rule by man is very serious in small and medium-sized enterprises. Many management measures and methods carry the personal imprint of managers. Managers implement management entirely according to personal will, resulting in a mess in enterprise management. Rule by man has great volatility. Each manager has different understanding and cognition of things, and their personalities vary greatly. They are easily influenced by environment and emotions when handling affairs, which can easily damage the work atmosphere and affect management efficiency. Even in small enterprises, the leader's personal charm and wisdom are important, but some routine work, such as positions and main processes, can be standardized, and some work can be institutionalized, freeing managers from these tasks. It is one-sided to think that establishing systems in small enterprises complicates management.

In the past, the founder of Harvard University left a legacy—250 copies of the book "The Christian's War Against the Devil, the World, and the Flesh." The school kept them in the library and stipulated that students could only read them in the library and could not take them out. In 1764, a fire destroyed the library. Before the fire, a student happened to take one copy out to read, so it survived. The next day, he learned of the fire and realized that this book was the only surviving copy of the 250 treasures. After a struggle, he returned the book to the principal. The principal accepted the book, thanked him, and then ordered his expulsion for violating school rules. Some objected, saying that he had preserved Harvard's "only legacy." The principal did not think so: he thanked the student because he was honest, but expelled him because school rules must not be violated. Harvard's philosophy is: "Let the school rules guard Harvard more completely and effectively than morality." Law first, adhere to institutionalized management—this is Harvard's attitude. It is also an important reason why Western society advocates the rule of law.

Institutional management is a universal rule of social behavior, "the rules of the game in society or artificial constraints that regulate interpersonal relationships." As a form of contract between people, institutions are maintained by certain behavioral rules. Enterprise systems are not only the institutional foundation and framework for the survival of the enterprise, but also the code of conduct for the enterprise and the behavioral norms for employees.

According to the Western view of human "nature," people will act out of the motive of maximizing their own interests and use all possible means to reduce their transaction costs. If an enterprise lacks strict systems and effective supervision, phenomena such as corruption, laziness, evasion, irresponsibility, immorality, and "free-riding" will occur in large numbers. Enterprise management will fall into chaos or crisis. Therefore, it is necessary for enterprises to design various management systems, implement supervision and control, use specific rules to restrain bad behavior, use money or material incentives as motivation, and use severe punishment to sanction violators.

The ultimate goal of institutionalized management is to change employee behavior, cultivate good habits, unify employee behavior, create a fair and just environment for everyone, and prevent and restrain bad behavior. Therefore, enterprises need to implement institutionalized management. When everyone "follows the system as a habit," the efficiency of enterprise management will improve, management costs will decrease, and enterprise management will easily enter the stage of "humanized management." Therefore, institutionalized management is also the foundation of humanized management. Humanized management does not mean no systems, but that people will not violate them. If following the system becomes a "quality" of employees, it will naturally promote the sublimation of enterprise management.

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