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Regional research project are, as is also regional industry, highly need-based. That is, understanding the stakeholders' (or customers') real challenges and related needs is important. This study is based on interviews with SMEs in the Northern parts of Finland, Norway and Sweden, but also on available innovation agendas and strategies for each country. The differences among the companies in those regions bring forward distinct needs, while many experience similar challenges, for example low population density, long distances and a high dependency on basic industries. Innovation is identified as a key driver of regional growth and competitiveness. SMEs rarely employ the term innovation to describe their activities, but rather stress `knowing the customer' as important. This indicates one of the challenges to implement innovation strategy as a driver for growth and competitiveness.