Ummmmm...it can be literary, but I happen to be a very character-driven writer, and I write genre romance.
That said, in general, I will start with a kernal of a plot (i.e. - What would happen if a mother who's only child died and was an organ donor fell in love with a man who's only child had a heart transplant?), then my characters begin to take form, and the plot grows from the characters.
Also, I use things like knowing their personal motto, and their greatest fear to plot my story. Also, knowing what they need to learn.
I just turned in a proposal for a book in which the heroine's motto is: I'll do it myself. She's independent to a fault. What does she need to learn? How to accept help, to lean on another person. What did I do in the plot that forces her to do that? I made her pregnant, gave her a complication, and forced her onto bedrest -- 900 miles away from her own bed.
You can develop character conflict from motto. In my recent release, A Kid to the Rescue, the heroine's motto is: Breath in, take what life gives you, hold it, breathe out, let it go. She doesn't hold onto anything, or anyone. This motto developed from her BACKSTORY. The stuff that happened to her in the past. The hero's motto was: Fight the good fight. He believed anything worth having is worth fighting for.
Those two clashed. And yet, that was exactly the lesson the heroine needed to learn. And he needed to learn that SOMETIMES you do have to let go.
Loads of my plot developed from there. (Again, there was a kernal of a plot to start with. The heroine had inherited custody of her nephew, who had witnessed his father murder his mother, and as a result, the child is mute for a large portion of the book.)
So...yes, you can grow genre fiction from characters.
Susan G., character-driven writer in search of a plot. <G>