I have been using this idea for a couple of months now. I got it from the author Nabokov, who wrote his novels this way.
I cannot stress how much this has helped my writing.
One twist on the technique I have been using, has been to write an alternate version for each index card. Since each card typically has no more than a few lines, and usually I am still in the process of working out the plot anyway, this has not really added much in the way of added time to my writing.
When I first did this, I thought it would be inefficient and I would at most only get a few odd lines here and there to replace the original writing with.
On the contrary, it tends to change about 1/3 of the writing. I find a lot of the first writing can be clumsy, with poor grammer, or awkward language. This second version often cleans that up.
If I find I can find no other way to describe the first version, I will try to write the exact opposite of what I wrote before. If the first version had a spider being saved, I will change it into a butterfly being killed. Often, this produces the novel idea or twist I would not have otherwise thought of.
The main use of these cards, for me, has been in having a bare bones skeleton of the story available to me for when I sit down to write the actual first draft. Often, many of the cards will go unused... but they were invaluable as stalling insurance.
I love this technique, and it is now part of my permanent toolbox.
