Traditional education models face great challenges from mobile devices, social networks and open courseware. Current professional knowledge and system design skills are inadequate for engineering-tracked students to thrive in a competitive job market and unpredictable professional contexts, which require them to develop unique ideas and innovations and know how to realize them. This study seeks to establish instructional arrangements in system engineering education to foster student creativity. A semester-long “embedded operating system (EOS)” course was offered as a trial system engineering course. In the paper, we explain the instructional challenges encountered and how these were addressed using the proposed Capability-Innovation-Motive (CIM) teaching model. Based on the CIM model, the EOS syllabus was redesigned to enhance student domain capabilities and build their innovative skills to help them better understand and manage abstract concepts discussed in the lectures. We then collected and analyzed student feedback by implementing Day Reconstruction Method (DRM). Analysis results show that the outcomes of both the best and worst final projects show a promising degree of creativity.