Select a substantive area of interest to research. Examples may include juvenile crime, academic achievement or medical care. Then pose a single question that will serve as a starting point for data collection through interviews or focus groups. Asking a subject, for example, to talk about her school experiences can lead her to open up more, talking in greater depth. It is important for the researcher to ask open-ended interview questions, rather than simple "yes or no" queries.
Begin data collection through interviews or focus groups. How many subjects you interview will be your decision as the researcher.
Code and categorize your data. Interview transcripts and notes form the data of your study. With qualitative data, coding and categorizing is a form of analysis because these data cannot be quantified. As you read through your interview notes or transcripts, note patterns and themes. This is an important step in forming the theory that will emerge.
Write memos that connect patterns and themes you've observed. Memo writing helps you articulate emerging ideas and patterns as observed in the data. The memos may inspire you to examine further categories or indicate a need for further research and data collection.
Sort through your completed memos and draft an outline. In this process the theory, grounded in your data collected from the real world, will begin to emerge.
Write an analytical report that articulates your emerging theory. Be sure to demonstrate how it fits and explains the subject of your research. The value of a grounded theory is how well it fits, that is, how well it explains real-life phenomena.