Innovations are crucial to companies’ competitive strength. Functional Product Development (FPD) is a base for a Functional Product Innovation vision, aiming for a new way to design, develop and sell physical products. The purpose in this paper is to discuss relations between the development process for these products, called FPD, and a simulation-driven approach to design these products, called SDD. FPD consider a holistic approach in early design phases. A life-cycle perspective, cross-company collaboration and a focus on stakeholder needs are examples of issues which are part of the wider view on product development. The SDD approach puts forward an integration of simulations to provide support for designers in FPD. The goal is to take the knowledge domains of engineering, business and production into account in the design to provide for the ability to sell ‘functions per unit’. The combination of FPD and SDD is paramount. The influence of needs plays a leading part in FPD and the use of simulations could create a virtual structure to combine and recombine resources and thus, nurture innovations.