I think revision is a very personal thing among authors. Everyone has their own method, and I actually vary my method depending on what it is I'm revising. One of my books was about halfway done when I decided I didn't like the direction it was going, so I scrapped the whole thing and started over. Sometimes minor changes are all that a story needs, and I'll just make small adjustments. I tend to suffer from what Alice Munro and Rollo May describe as "a big relief" or a "breakthrough of ideas", the "eureka!" moment that Isaac Asimov described so well in his essay. I usually find that taking a long walk helps me get my best ideas, but I also have another tactic. I find a movie or TV show about whatever it is I'm writing and watch it just before I go to bed; when I wake in the morning to write, I usually get that burst of inspiration that I need, fueled no doubt by my unconscious mind's interpretation of what I watched just before bed.
That said, whether I completely start from scratch or modify what I have depends on the story I'm revising. Some stories can be saved, some need an overhaul of Frankensteineian proportions, and some just need to be like Jesus and take a 3-day hiatus before they are resurrected in a new, more powerful way. One story I'm working on right now has failed me in many ways, and I'm considering a complete re-do. As many have said before, writing is easy; revision is a murder faker.
So here are some things I look for during the revision process:
On first read, I look at Story
· Story Arc
Conflict, Crisis, Resolution
Will the plot Entice, Engage, and eventually Satisfy readers?
· Theme or Message
On second read, I look at Characters
· Author's Interpretation
· How another character sees each character
On third read, I look at Setting
· Population (number and type)
· Time (of day and year)
Finally, I check for the following little things
· Does the story start with tension?
· Have I answered the "Why" questions?
· Is this the best POV to tell the story?
· Sentence structure variation
· Word Choice (avoid complex words, vary words, vary conjunctions)
· Am I clear and concise?
· Am I using any clichès and/or idioms?
· Am I showing rather than telling?
· If it is a short story, are the characters' names or descriptions too similar?