Everyone knows what collage is as an art form - a whole made of pieces that once belonged to other wholes. In other words, pieces that don't necessary belong are gathered on one page and made into a particular entity. Or, a particular entity arises from the bits&scraps.
A literary collage can be more than one thing.
If you are in a group, let everyone write some sentence on a scrap of paper. Then, put the scraps randomly one under, over or next to each other, face down, and turn them to read the text. Allow room for small adjustments of forms, e.g. tenses or pronouns.
Or, choose a topic and write a few short pieces about and around it. They may differ in character, tone, and length. Then, put them together in one text. You can number the parts.
For a famous example, see Thirteen Ways of Looking at a Blackbird by Wallace Stevens:
https://www.poetryfoundation.org/poems/45236/thirteen-ways-of-looking-at-a-blackbird
Choose whether you'd rather go for poetry or prose.