Contextual inquiries involve observing participants using a product in their natural environment. Think of contextual inquiries like any nature show you would see on the Discovery Channel.
The goal is to watch your participants do what they would normally do as if you weren’t there. This will help you understand users’ needs in context.
Contextual inquiries shouldn’t be confused with user interviews. During user interviews, you are the one leading the interaction. In a contextual inquiry, it’s the user who leads. Don’t ask any questions. Asking questions will put them into an interviewer/interviewee context and affect their behavior. The goal is to observe to gain empathy and insight. It’s like being a fly on the wall.
For example, let’s say you work for Microsoft and are studying how people use Microsoft Excel. You would schedule time with someone who uses Excel at their office and watch how they use the product during their normal routine.