That is exactly what I tell upcoming developers when they ask for general advice... Making an outline of the entire story helps with keeping continuity in check, and they can change it over time and fill in all the nitty gritty details as they actually write/develop it all... Especially with highly complex choice effecting stories... But having a road map is really key in keeping everything lined up...
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For me this is proving to be more difficult than I thought it would be. I work in tech and am used to being very organized and methodical about my day job. That doesn't work for me at all when I put my developer hat on though. I find the whole process messy and disorganized.
I can't just sit down and say to myself, ok let's work on the backstory for Jane today. Go brain, go. My brain is like, yeah fuck you I want to think about that stripper scene again... I could force myself to write something for Jane anyway but it won't be much good. So I go through that stripper scene again and probably tweak it a bit and then move on to whatever the next thing is that pops into my head instead of working on Jane. But then a few days later I'll just be screwing around doing who knows what and an idea for Jane just pops into my head. That's when I write her story.
So I do have an idea what sort of theme I want pretty early and I know what sorts of characters I want. I also have some ideas for big events that I want to do and finales and stuff, but nothing is connected yet. I don't know why I'm friends with this person yet. I don't even know how I met her yet. But I know what she's doing in this big event later and I know that I have to come up with something earlier to justify that...
I also find that as I fill things in for certain characters or events I decide to completely change something I had already written before. Maybe I took an earlier event too far. Maybe one of my characters just doesn't make sense for this scene I want and I need to change their motivations and personality, or maybe their backstory a bit. So I'm not so sure about filling things in as I go if I were to try and do an episodic game or something.
I suspect for me I will need to have pretty much the whole game mapped out ahead of time before I start rendering anything. I definitely will make some tweaks when I get to the actual rendering but I need the story, characters, and events to basically all be nailed down and set up so they all feel like they fit into the puzzle to keep me from veering off course as I get caught up rendering an individual scene.