This research focuses on identifying the abilities and strategies of 'hidden champions' in Sweden that allow them to successfully compete in the world market. The results from this exploratory multiple-case study indicate that the long-term success of such companies is rooted in a focused strategy with soft diversification, continuous innovation through close relationships with customers and employees, and providing superior quality and customised services compared with competitors. Our research demonstrates that hidden champions are unafraid of low-price competitors from emerging economies and succeed through excellent innovation governance. They offer many lessons for other companies on how to govern innovation.