Design is not l'art pour l'art. Design is a planning process. As a verb, "to design" refers to the process of originating and developing a plan for a product, structure, system, or component with intention (Wikipedia on Design).
Yes, many companies develop products for markets which do not exist. It's not that these markets are simply not ready for the innovation to take off. It's because there is NO need for the product or the service so far. In that scenario companies have to create the need before they can sell to anyone.
User centered design or UCD is a design philosophy and a process in which the needs, wants, and limitations of the end user are given extensive attention at each stage of the design process (Wikipedia on UCD).While intuition is nice and probably many designers and creatives claim to design by intuition, user-centered design requires much more testing and optimization of the end user experience. The process therefore typically starts with intensive gathering of user requirements before the process of designing starts.
Even how users can participate varies and defines the approach taken. In cooperative or participatory design users and designers are involved equally. Contextual design refers to the actual context in which design will be used. Anyway all approaches refer to ISO standard Human-centered design processes for interactive systems (ISO 13407 Model, 1999)