The document defines observation as the systematic recording of behaviors, objects, and events to learn about a phenomenon. It classifies observation as structured vs unstructured, disguised vs undisguised, and natural vs contrived. Various observation methods are described such as personal observation, mechanical observation, audits, content analysis, and trace analysis. Each method is evaluated based on factors like degree of structure, ability to observe naturally, and analysis bias. Advantages of observation include measuring actual behavior while disadvantages include inability to obtain reasons for behavior and potential biases.