The boundaries between engineering design and business are becoming increasingly blurred and the need to produce innovative, entrepreneurial engineering students is growing. This work explores the meaning of innovation and how innovation is currently included in undergraduate curricula. It presents an 8 element model for encouraging innovation in cornerstone design courses based on a required cornerstone design course at the Korea Advanced Institute of Science and Technology (KAIST). The difficulty in measuring innovation in student design projects is discussed, the limitations of proxies for innovation such as patents and publications are demonstrated, and the impact of national and disciplinary culture on innovation proxies is examined. The challenges and limitations in continuing design projects after the end of the semester and for incubating technology developed during the semester at KAIST are described and a follow-up course on innovation and entrepreneurship is proposed.