The implementation of a legislative mandate to promote innovation in postsecondary education through the Fund for the Improvement of Postsecondary Education (FIPSE) is analyzed. Attention is directed to how this highly discretionary program successfully translated policy goals into grants practices. The values of two implementation strategies (applying standardized procedures or encouraging adaptation) are compared. A historical analysis of policy development by the FIPSE considers adaptive implementation based on information from program archives, original documents, reports, and interviews with staff. In considering monitoring, the concern is whether innovation was encouraged by insisting upon compliance or by offering assistance. Information on 66 of FIPSE's grants is reported based on data from surveys, workshops, project files, and interviews. During implementation, bureaucratic pressures emphasized efficiency, accountability, and standardization. Supportive conditions at FIPSE's inception enabled staff to pursue an adaptive approach. Then, by emphasizing assistance rather than compliance monitoring, innovation was encouraged. Administrators are advised to tailor their procedures to the main purposes of programs rather than routinely adopting technical and standardized procedures. (Author/SW)