SETTING: Take your reader to new worlds and introduce them to fascinating people interacting within an unusual environment and culture. I’m not necessarily talking about “world-building” as found in science fiction and fantasy. Chinatown, New York City, is an exotic world if that is not your home. Life is in the details—so give the details (of Chinatown, East L.A., South Beach, Sitka) that will surprise and delight your readers. As a rule of thumb, if you’re able to (without a total re-write) transport your plot to another location, you are not using the unique qualities of the story’s setting to your advantage.
ACTION: Readers cheer for characters who take things into their own hands. Not someone who merely reacts to events going on around her; or worse, hangs back, reflecting philosophically about it all. It’s not what happens to the character that makes her interesting, it’s what she does about it. Passive characters are boring, and the story has no emotional power. Most of us have read “post-modern” short stories in which a lonesome urban apartment dweller perches on a windowsill gazing below at the river of strangers, and... does nothing... for five or six pages. A college press or "literary” magazine might publish such plot-less fiction, but it won’t find commercial success.
HIGH STAKES: Bestselling fiction involves weighty outcomes. The stakes don’t have to be literally earth-shattering—say, Flash Gordon preventing the destruction of the galaxy. If we care about the character, and she has been trying for years to get pregnant, whether or not she conceives a child (by resorting to magic, or science?) matters to us. We care because we care about her. As a rule of thumb, short stories can get away with lower stakes than a novel. If the villain’s plot is to poison pigeons, readers are not going to care enough to sustain a 400-page novel. But a character who is a pigeon-lover trying to prevent a bird-hater from killing pigeons might hold us for the length of a short-story. Or, in a novel, it could work as a sub-plot. In any genre, all your main characters must have clear goals, so your reader can know whether the character has won or lost. In fact, each scene should have a goal (for more on this, read the post on “Story Questions”).