Bunch of us got together at Skywalker Ranch, sat down in a room, and decided what the story was going to be -- book folks, comic book people, artists, game guys, toy makers, all like that. We all pitched ideas, came up with a story line. I took notes, went home, wrote the outline, which was fairly extensive, and that was the basis for things.
If you want to know the details, Marc Cotta Vaz wrote a book about it. The Secrets of Star Wars: Shadows of the Empire
Pretty interesting stuff, on how it all came to be, and why.