"The worst thing you can waste..."

A friend once told me that potential is the worst thing you can waste. Whether that was his original take or something someone told him it is a pretty solid statement. I believe potential to be the abilities and accomplishments a person can one day achieve. How do we know when someone has potential? Do we push them? Do we try to put them in situations that will lead them to master what they are good at? Should we let people figure it out for themselves and make decisions without encouraging them to try the things they showed great potential in? Is this our responsibility? Are there other traits, feelings or moments we should be trading our potential in for?