Method? That implies some rational, linear process - like a factory that is designed to efficiently churn out widgets. I wish I knew of an efficent step 1, step2, etc method that would gaurantee quality results.
My 'method' is perhaps not particulary efficient, but it suits my purposes. Here is how I would characterize my rather chaotic process:
Observe & Listen - ideas are everywhere, big & small. Open your eyes, ears, and mind and notice things.
Scribble - ideas are fleeting, jot alot.
Petri Dish - any idea can be the germ for a song. Pick one, let it grow - just like the way they culture germs or mold in a petri dish in a biology lab. Ponder your chosen idea, see what else comes to mind (scribble, scribble, scribble), let it blossom and take more form in your mind.
A flower, not a forest - a song is a small thing, just a few words and some notes. Don't try to grow a whole forest, just one little flower. Keep it simple - you are writing a song, not an encyclopedia.
Hope this is helpful . . . good topic. But if I think about how to do it too much, then I'm not actually doing it.