As is the case with all innovation and design research methods, the first thing is to determine if helps answer the question being asked. Generally speaking, innovation or design questions can include the following or a combination of the following different types:
Exploratory, mapping a problem space. The value of ethnography is to build a foundational understanding through people's lived experiences.
Explanatory, describing a specific problem. The value of ethnography here is to use personal stories in context to develop a robust understanding of a phenomenon.
Evaluative, testing existing solutions. The value of ethnography is to use first-hand experiences in context to evaluate solutions.
With this, here are some scenarios when it is appropriate to use ethnographic research and where inappropriate.
Use design ethnography when you want to...
Gain a contextual understanding of actions, habits, and everyday behaviours of people or cohorts of people
Learn about the experiences of an under-studied group
Want to get a closer view of behaviour patterns of edge/ extreme users (generally excluded groups) of a product or service, or solution
Want to evaluate specific solutions in context, get feedback on how they can be improved
Be critical of design ethnography when...
The underlying intention is unchecked, and the research becomes invariably extractive. There's no implicit or explicit value for the subjects of the study
There is too much social, emotional, physical, financial, or spiritual risk for the participant to be involved and no appropriate mitigating strategies to ensure their safety
Project logistics—budgets, timelines, and other resource constraints—inhibit extensive ethnographic studies