Universities of applied science are re-designing their pedagogies in line with generative AI. Individual innovation competence is a core learning target because it relates to creativity, social skills, future orientation, development project management skills, and more items that are not easily replaced with AI. Design-based pedagogies are applied in student-led research, development and innovation (RDI) learning in university–industry collaborations. Design thinking can significantly improve innovation outcomes. However, it is not yet known what hinders and enables a shift to design-based pedagogies in higher education institutions (HEI). This paper reports findings from a case study of one Finnish university of applied science aiming to transform the entire university for design-based education. The research question was: Based on current curricula and teachers’ and students’ experiences, does a total shift to design-based education (DBE) seem possible in HEI? What are the enabling and hindering factors? Current curricula were analyzed, semi-structured interviews with teachers of design thinking pilot projects were conducted, and students were surveyed. The findings indicate that most curricula need to be rewritten. According to the teachers, students’ proactivity, the design thinking process model, and well-functioning communication with industry partners are the strongest DBE enablers. Problems in planning and the industry co-operation workload are among the biggest obstacles. Based on the student material, the strongest enabling factor is organizing in multidisciplinary teams. The most common obstacle is an unclear task. Improvements in teaching, teacher training and pedagogical management of DBE are suggested. This paper’s originality is in highlighting an opportunity for applied science universities to promote student-led RDI for innovations by unfolding the opportunities for design thinking in this time of GenAI.