Ethnography is the “field work” side of anthropology. Examples of ethnography are person-to-person interviews, surveys, focus groups, direct observation, and indirect observation.
Going to lunch with a customer and letting them do most of the talking is one approach to ethnography. More academic approaches involve “field research” where ethnographers statistically sample preferences among potential customers. This data-centric approach is fairly conventional in the marketing world but somewhat dangerous in product Design because surveys, focus groups, and questionnaires fail to capture the “why” behind people’s preferences. It’s the “why” that might lead to future innovation. Do not expect a survey to return insights that your competition doesn’t already have through their own surveys of the same demographic. From an innovation perspective there is little competitive advantage to be found from conventional surveys.
Modern approaches to ethnography emphasize casual discussions about wide ranging topics, often not directly related to the product or service. The goal is to learn something new about the people. IDEO popularized this approach to ethnography, which has repeatedly proven its effectiveness. Intuit calls this “follow me home”. Whatever you call it, this is a good idea.
The smart product Designer uses a layered approach to ethnography. They still use traditional surveys, focus groups, and questionnaires, but not as the primary source of inspiration. The primary sources are causal person-to-person interviews (i.e. subject interviews), direct observation (i.e. watching them do stuff), and indirect observation (i.e. through video, key loggers, or other technologies).