We see the world not as it is but as we are. When we describe something, we describe ourselves, our perceptions, paradigms, fears, dreams, and desires. The problems and obstacles that a character faces are, therefore, the externalizations of who he is, or an externalization of his paradigms and ways of seeing the world. Our paradigms and the way we see things are also responsible for our desires, needs and goals.
Transformation is the result of a change in our paradigms, and this change is caused by a realization which alters how we see the world and ourselves. Often, such a change of perspective enables the character to overcome the problem that he faces. So the action of the story must create a paradigm shift for the character, elicit a realization of something about himself, the world, and other people around him enabling him to see things from a new perspective, and therefore helping him overcome the problem. So the question that you need to ask is—what is the character’s paradigm? How does the inciting incident challenge this paradigm? The challenge to the character’s paradigm creates a story crisis, a moment when the character cannot go on as he had been thus far. He must do something different, and he can only do something different if he lets go of some aspect of himself or learns live in a new way. As you probably guessed, the character refuses to do this, at first. He tries to do things that he knows, and as he does, he finds himself in only greater trouble. Eventually, and as a result of his trouble, he becomes aware of something crucial, and this revelation changes his paradigms of thoughts and his views of himself, others, or the world. As a result of this shift in thinking, he is able to do something that he wasn’t able to do before.