In the world of pro sports, it's used most often as a bet-hedger by general managers, who see raw talent in a player whom they also think lacks the discipline or other psychological necessities to be a star at the top pro level. See Johnny "JFF" Manziel in college football. See the idea of "phenom" among baseball scouts. (That's you, Clint Hurdle, though you're doing more and more to redeem yourself as a manager.)
At least it's an honest bet-hedger.
In larger society, though, it's something else. The word "potential" may be used for a city, a social group, or an organization that makes many people scratch their heads because they think more could be "happening" out of that city or other grouping.
For example, you might here something like this:
"BFE City has so much potential. I don't know why more people don't live there and it doesn't have a better economy."
So, in these cases, it may have the head-scratching angle.
Or, it may have a polite back of the hand angle, in which case, it may really mean:
"BFE City should be doing better than it is, but a mix of poor blacks, older whites, lingering racial issues, and a declining population due to all of the above means it isn't better."
Or (real world business name):
"Yahoo has so much potential. I don't know why people don't flock to it more."
Which, with the back of the hand, means:
"Yahoo still has potential, but it's an uphill climb. Jerry Yang suckered a clueless board into not selling, Marissa Mayer is in over her head, and Yahoo's too cheap to fix what is far and away the most hacked webmail system."
In that case, it can be a tool for blaming. Or it can be an accurate assessment, but one that only goes to the first level of things. Or, it can fall short of that, even, and be a pseudo-analysis, if it indicates that this failure to live up to potential is something relatively recent.
But, it may be older than that.
Maybe somebody told the organization called "The Daughters of the White-Hearted Anasazi" 100 years ago that it had potential. Maybe a number of somebodies told it that. Maybe just a few of those somebodies dropped in on meetings when they said it, and made it look like some growth boom was happening.
And then? The Daughters coasted on their newly found reputation and that was that.
Or the denizens of BFE City were told their one special attraction was a guaranteed draw. But, after it petered out after a boomlet, nobody tried to build on it.
And, then, 100 years later, you heard tales about how hopping the town was back then. Made you think it was twice as big as now, when reality says it was about 25 percent bigger.
At this point, "potential" takes on a life of its own.
It can become a Bitcoin of sorts, eagerly banked, however redeemable nowhere. That said, with such social Bitcoin (as, I suspect, with the actual), many of the hoarders know this early on. Without waiting for explicit suckers, they are expecting somebody else to do the redeeming for them.
Or, it becomes the Mark of Cain. Everybody in the community that fails to help the potential be realized, let alone those who honestly say that "the potential has no clothes," are themselves the problem.
Or it becomes a New Ageism issue, somewhat similar to the above, but where gurus come along promising to heal the "negativity." And, when they fail, that's only proof of the strength of the negativity, rather than a sign of one of the other issues above.
Unfortunately, this isn't like science, with the old joke that it just takes enough old scientists dying off to get a new theory accepted. If enough people die off, or leave, a community, a social organization, or a movement. And, with the human capital necessary actually threatening to fall below critical mass, "potential," and any reality behind it, fade further and further away from the horizon.
In the long run, as Keynes said, we're all dead. Eventually, the same happens to "potential" as a fiat social currency.
(As for Manziel? I suspect he'll remain a head case and hence, Roger Staubach is very wrong when he says he'd burn the No. 1 draft choice on him. That said, Jethro Jerry Jones would do the same.)
While statistical analysis can be overrated, nonetheless, big businesses do practice the equivalent of it on cities. If they not only don't see potential, but see a trend line in the opposite direction, and, to the degree they trade in numbers besides cold data and cash and suspect a human element behind that, they don't buy the Bitcoin. Ditto for angel investors and some magic new business idea.
Finally, especially when used in a new Age sense, it can become trivial. Sure, everyone has potential ... but for what? An amoeba has potential to become two if nothing else.