I start with a situation, usually. Say I want to write about terraforming Mars—then I need a terraformer, a person opposed to terraforming, a political radical, a Machiavel, a builder, a psychologist, etc. The French structuralists spoke of characters as actants, as the action-doers who make the plot happen. A single character could cover a couple of actants at once, or an actant could be split between a few characters. This I’ve found useful in clarifying things to myself as I get started. Therefore, characters are, at first, kind of just positions, or needed operators of the plot. But this is just the start.
Another useful conceptual tool is protagonicity. Does a novel have high protagonicity or low protagonicity—meaning the story is maybe spread out among a lot of different characters, who might be considered minor characters, except there aren’t any major characters. The story I intend to tell determines or suggests how I might go about deciding this.
Long, conceptually complex interview – the whole thing is worth a read.