Stream of consciousness (which I assume is what you're referring to) doesn't exclude the possibility of having a very prestructured narrative. Its a narrative mode in which the narrative is delivered as though through the thoughts or internal monologue of one of its characters. So, you can have the plot all laid out in extreme detail - the only thing stream of consciousness affects is the way the story is delivered. It sounds like you might be confused with Free Associaton, or maybe even Automatic writing.
writing without an outline is good for short stories (1000-4000 words), because those can be done, realistically, in a couple of days, maybe even less than a day, while the idea is fresh and vivid in your mind. HOWEVER, if you're writing a 100,000 word opus, an outline is a good idea. But, as Cogito stated way back, don't make the outline your main focus. In all seriousness, for my current novel effort, I have a one page outline. Nothing more. It just has the major plot points, a bit of a flow chart drawn on it to show how people get where, and the storyline arc in rough sketch on the back, so I can pace it right. An outline isn't the project. The novel or story is the project.
I'm writing a book, and I started with only a few vague ideas about the plot. The most important part was that I knew pretty much exactly who I wanted my characters to be. I started with stuff off the top of my head, and then, being familiar with my characters and basing a few off of real people I know, it was easy to decide how they would react and do things, and I just kept coming up with more new ideas as I went, occasionally getting them to pre-specified scenes that I had imagined before I even started. I like it when I surprise myself with unexpected twists that I didn't even know were coming until I wrote them.
To me plot is just a guide to refer as I write. Usually ideas come out in the process, so "strictly follow the plot" never happen. If I can have fun writing, then following plot strictly is illogical. Plotting however, helps me to see the path. My style.
The novel (first draft) I finished recently was heavily plotted beforehand. I knew what would happen in each chapter before I started writing it. It helped me get through it, but the writing is very uneven. I tended to rush certain chapters because I wanted them out of the way so i could write the 'good bit'. The new one I'm writing has only a very basic outline. I know the start, the end, and the main conflict. The rest I'm making up as I go. I'm 10,000 words in and having way more fun this time. Each way works. Find what suits you
For me, this type of freestyle writing works for me if I have enough backing inspirational material. A couple months ago, I jotted down a starter for a new short story, just about six or seven lines about the main idea of it.
It's possible to improvise as you're writing your story but I think its important to have your characters, major plot (and preferably major events) figured out first before you write it properly. Then after that, improvising isn't so bad because at least you know where your story is going before you start "making it up as you go along".
Usually I start with a basic idea, then when I start writing it's like I'm in the right frame of mind to flesh it out, so I can just write a whole first draft there and then.
I prefer this method for two reasons: 1) I find that if I have an outline, I tend to write to the bullet points. For me, it means I'm rushing to the end and it never ends up turning out very good. 2) It's more fun. For me, part of the fun of writing is seeing where I go. It can make a longer novel more difficult, but I'm the type of writer that edits as he goes along. Because of that, it doesn't end up being to much of an issue. There are a few things that I do try to do before I start writing however. I try to give the characters their personalities. I know that they will change as I write, and the story evolves, but getting basic starting personalities helps me write dialogue, and generally helps me get the story flowing. Also, I do have a general end in mind. But when I say general, I mean VERY general.
To me writing without a plan seems fine, except for none thing. Making up the plot as you write takes so much longer than making up the plot and then writing. By making up the plot I mean you've concieved every pivotal scene in the story. You don't have to flesh out the scene but as long as you know a few sentences worth that basically explains how that scene drives the plot forward. If you don't have the main plot points in your head or written down and you start writing your first draft then you're setting yourself up for alot of restructuring the second time round. Well. I guess I prefer plots with plenty of twists and lots of action. To create a plot(especially in what I've just described) is to solve a sequence of problems that you've created yourself, and thereafter tailor each problem to accomodate the solution. You can create the problem in the form of a few sentences as one would in an outline or you can create the problem in the form of several chapters of your first draft. Now when it's time for the solutions and the subsequent tinkering, what's easier? Writing in the hidden knife that should have been strapped to the MC'a ankle so she can overcome the villain (with all the explanation that comes with it) or adding a sentence to your outline so when you do start writing you know why and how she would be carrying a knife in the first place. An outline gives you options, and the freedom to make changes that don't require you to revise the first 20k that you've already written. Your first draft will also be more cohesive and focused, cutting down some major time on the rewrite. There's this feeling that writers get when they stumble upon an ingenious plot idea. It's 'the urge' that pressures them to turn it into words and see what comes of it. Its as if they can only explore this idea by writing it down and 'beginning' the story. I get that urge too... and I quash it. It's only ever worth writing anything if you know for certain it can blossom into something magnificent (or at least coherent). To me this is why so many new writers have numerous unfinished projects. They thought of scintilating beginnings but they never bothered about the end. Or more commonly, if they got the end, they never conceptualised the middle that leads to the end and halfway through they're stranded. There's no such thing as writer's block if you have a plan. Off course. This is only what works for me and I see that quite a few of you think otherwise. I only hope that you are in fact employing your tried and trusted method, and not simply submitting to 'the urge'....
I usually have a basic plotline, characters and stuff, and it develops from there. There will be a few causal agents throughout, basic plot deviations and extra characters who either get put in or don't. I plan less for fiction then I do scripting, as I like the finites of scripting (and I have to work out how I'd see it)