This paper selects Soton Co., Ltd., which is the top brand in the global straw industry and the “hidden champion” among domestic SMEs, as the research object, and conducts a longitudinal case study on the connotation and formation of its micro-innovation strategy. The findings are as follows: First, the connotation of micro-innovation strategy includes six elements: iterative trial and error, extensive penetration, differentiated operation under customer orientation, resource integration under “problem-knowledge” orientation, resource integration under open collaboration, and ecological construction under the guidance of diversified decision-making channels. Second, there are significant differences in the micro-innovation strategy in different development stages of hidden champions, which are mainly reflected in four modes: differentiated, specialized, integrated, and platform-based micro-innovation strategy. Third, business difficulty, external opportunity, entrepreneur learning, organizational learning, and stakeholder cooperation are the core factors driving the formation of micro-innovation strategy. Fourth, the four modes of micro-innovation strategy are formed under the exogenous drive of market pressure, the endogenous drive of technology restriction, the dual drive of low organizational value and Internet information-sharing opportunity, and the dual drive of ecological growth pressure and digital transformation opportunity. This paper further enriches the research on the connotation and modes of micro-innovation and constructs a theoretical framework for the formation of the micro-innovation strategy of hidden champions, providing theoretical support and guidance for SMEs to formulate and implement micro-innovation strategy.