I come up with an idea for a story, then I think on it for several weeks, getting more and more specific, getting rid of things that are stupid and adding some (hopefully) better ones. Then I get really specific and write all the missions down, with a basic overview of what happens.
Then I kind of FRED off the top of my head. (Rhyme!
)
I start FREDding, and I notice peculiarities that maybe I didn't on paper, such as things that can't be done. So I alter the mission design to avoid things of that sort. I write up conversations between pilots and other characters before FREDding a single event. Then I FRED away, tweaking things, improving them, until eventually I have an acceptable mission before me. Works really well for me, this system.
Of course, I am not what you would call experienced.
I'm about halfway through my first campaign...