This paper shows how the design thinking skills of students learning at a distance can be consciously developed, and deliberately applied outside of the creative industries in what are termed 'embedded' contexts. The distance learning model of education pioneered by The Open University is briefly described before the technological innovations--which feature a fully integrated web 2.0 learning environment and design studio--and concepts behind a new course in Design Thinking are explained in detail. In teaching the more generic skills of design and developing experiential knowledge in students, the paper also explores the changing role of designers in becoming less problem-focussed and more socially engaged through the construction of design process. The paper ends by presenting the results of an extensive student and tutor survey as part of an ongoing longitudinal study which indicate that this new approach to teaching design has been successful.