Concept 08 · 7 min
You don’t retrain it. You hand it the right sheet, at the right time.
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Scene 1
Good writer, wrong format
Mr. Miller now asks for a €25,000 loan: above Sarah’s €20,000 limit, so the credit committee decides. She asks the LLM to write the credit note, with his file attached.
Switch the bank’s procedure on and off, and compare the two notes.
What the LLM receives
Sarah’s request
Prepare the committee note for Mr. Miller’s request.
Mr. Miller’s file
Client file: Mr. Miller, Miller Joinery, client since 2019. 3 accounts: business current account, savings, equipment loan. Current overdraft limit €10,000. He asks for a €25,000 loan. One invoice 12 days overdue. Sarah can approve up to €20,000.
The note it writes
- 1Client Overview
- 2Loan Request
- 3Risk Assessment
- 4Approval Authority
- 5Recommendation
- 6Action Items
Not our format. Redo. M. Walsh
Read the whole noteHide the note
Committee Note – Loan Request – Mr. Miller
Date: Monday, 6 October 2026
Prepared by: Sarah [Last Name], Relationship Manager
1. Client Overview
| Item | Details |
| Client | Mr. John Miller – sole proprietor of Miller Joinery |
| Relationship start | 2019 |
| Account portfolio | • Business Current Account (active) • Savings Account (balance € [insert latest balance]) • Equipment Loan (outstanding principal € [insert amount]) |
| Current overdraft facility | € 10,000 (fully utilised / partially utilised – please confirm) |
| Credit history | No major defaults since inception. One invoice currently 12 days overdue (invoice # [ref]; amount € [amount]). |
2. Loan Request
| Parameter | Detail |
| Requested amount | € 25,000 |
| Purpose | Expansion of workshop capacity / purchase of additional machinery (as per client’s brief). |
| Proposed term | [Insert suggested repayment period, e.g., 36 months] |
| Security | Existing equipment loan collateral plus potential charge over business assets (to be confirmed). |
| Interest rate / pricing | To be aligned with current SME loan pricing (e.g., Euribor + X bps). |
3. Risk Assessment
| Risk factor | Assessment |
| Credit utilisation | Overdraft limit of €10,000 is already in place; current utilisation level needs verification. |
| Payment behaviour | One invoice 12 days overdue – a minor, isolated incident; no pattern of late payments observed. |
| Cash flow | Recent bank statements show stable cash inflows from joinery contracts; however, a detailed cash‑flow projection for the loan period should be attached. |
| Collateral | Existing equipment loan provides a first‑rank security; additional assets can be pledged to cover the extra €15,000. |
| Industry outlook | Custom joinery sector remains resilient with modest growth forecasts for 2026‑2028. |
Overall risk rating: Medium‑Low (subject to confirmation of cash‑flow coverage and collateral adequacy).
4. Approval Authority
- Relationship Manager (Sarah) – authorised to approve up to €20,000.
- Requested amount exceeds this limit by €5,000.
5. Recommendation
1. Approve €20,000 of the requested €25,000 under the standard SME loan product, using the existing equipment loan security and, if required, a supplemental charge over the business premises/equipment.
2. Escalate the remaining €5,000 to the Credit Committee for final approval, with the following conditions:
- Submission of a 12‑month cash‑flow forecast demonstrating sufficient service‑ability for the full €25,000.
- Confirmation that the additional €5,000 will be secured by a first‑rank charge on newly acquired machinery.
- Acceptance of a revised repayment schedule that aligns with the projected cash inflows.
If the Committee approves the additional €5,000, the total loan will be €25,000, fully meeting the client’s expansion needs.
6. Action Items
| Action | Owner | Due Date |
| Verify current overdraft utilisation and exact balance of equipment loan. | Operations – Account Services | 8 Oct 2026 |
| Obtain detailed cash‑flow projection from Mr. Miller. | Sarah (RM) | 10 Oct 2026 |
| Prepare security documentation for additional €5,000. | Credit – Collateral Team | 12 Oct 2026 |
| Present €5,000 portion to Credit Committee. | Sarah (RM) | 15 Oct 2026 |
Prepared by:
Sarah [Last Name] – Relationship Manager
Miller Joinery – Client File # [xxxx]
*End of note.*
Wrong format: the note must be redone before the committee can assess it.
Same LLM, same request: one procedure changed the work. Written for an LLM, it is called a skill: instructions for one kind of task, with a name and a short description. Nobody touched the LLM itself.
Scene 2
Skills in practice
A bank has dozens of procedures. Pasted into the prompt, they would fill the context window on every request. So the LLM keeps only an index of the skills’ names, each with a short description, and loads a skill only when the task needs it.
Scroll: the diagram moves forward, the trace shows what each part passes on.
| Step | Part | What it passes on |
|---|---|---|
| 1 | Request | Sarah’s request and Mr. Miller’s file |
| 2 | Index | one line per skill: a name and a description |
| 3 | LLM | the name of the skill that matches |
| 4 | Tool call | load_skill, with that name |
| 5 | Skill loaded | the full skill, now in the context window |
| 6 | Note | the note, the bank’s way |
Each line costs about 15 tokens; the full skills stay out of the context window.
Credit committee note
Use exactly these six sections, in this order, each as a heading: Request, Client, Financials, Risks, Recommendation, Conditions. One or two sentences each. Facts from the client file only; write “not in the file” when a fact is missing.
+101 tokens: the full skill is now in the context window.
Request
Mr. Miller of Miller Joinery requests a new loan of €25,000.
Client
Client since 2019; holds a business current account, a savings account, and an equipment loan with the bank.
Financials
Current overdraft limit is €10,000; one invoice is 12 days overdue. No other financial details are provided in the file.
Risks
The overdue invoice indicates a short‑term cash‑flow issue; the requested amount exceeds the relationship manager’s approval limit.
Recommendation
Approve the loan up to the manager’s limit of €20,000, with the remaining €5,000 to be considered by the credit committee.
Conditions
Approval subject to repayment of the overdue invoice within 30 days and the provision of additional collateral or a personal guarantee for the amount above €20,000.
| Step | Part | What it passes on |
|---|---|---|
| 1 | Request | Sarah’s request and Mr. Miller’s file |
| 2 | Index | one line per skill: a name and a description |
| 3 | LLM | the name of the skill that matches |
| 4 | Tool call | load_skill, with that name |
| 5 | Skill loaded | the full skill, now in the context window |
| 6 | Note | the note, the bank’s way |
Each line costs about 15 tokens; the full skills stay out of the context window.
Credit committee note
Use exactly these six sections, in this order, each as a heading: Request, Client, Financials, Risks, Recommendation, Conditions. One or two sentences each. Facts from the client file only; write “not in the file” when a fact is missing.
+101 tokens: the full skill is now in the context window.
Request
Mr. Miller of Miller Joinery requests a new loan of €25,000.
Client
Client since 2019; holds a business current account, a savings account, and an equipment loan with the bank.
Financials
Current overdraft limit is €10,000; one invoice is 12 days overdue. No other financial details are provided in the file.
Risks
The overdue invoice indicates a short‑term cash‑flow issue; the requested amount exceeds the relationship manager’s approval limit.
Recommendation
Approve the loan up to the manager’s limit of €20,000, with the remaining €5,000 to be considered by the credit committee.
Conditions
Approval subject to repayment of the overdue invoice within 30 days and the provision of additional collateral or a personal guarantee for the amount above €20,000.
Each skill costs one line in the index (about 15 tokens), and the full sheet (101 tokens here) only when a task needs it. Paste them all into the prompt instead, and every request reads 174 tokens more, even “what’s for lunch?”. Here, with everything pasted, the note still came out right: four short sheets. Real procedures run to pages, and a bank has dozens.
Loading a skill is a tool call, as on the Tools page, except it returns instructions instead of data. Until a task needs it, a skill costs one line in the index.
Scene 3
Describe it well
In the index, the LLM sees only each skill’s name and description. A colleague added the complaint skill in a hurry. Choose how it is labelled, then send Mrs. Chen’s complaint.
Challenge
- Get Mrs. Chen’s reply written the bank’s way.
- Bonus: find both labels the LLM ignores (0/2).
Choose how the complaint skill is labelled, then send Mrs. Chen’s complaint.
What the LLM sees in its context window
- - Credit committee note: Write a note for the credit committee in the bank’s format.
- - proc-0412: Internal procedure.
- - Plain-language explainer: Explain a banking product to a client without jargon.
Mrs. Chen’s complaint
Reply to Mrs. Chen’s complaint: she was charged the €35 card fee twice this month.
Nothing sent yet.
The procedure was the same every time; only its line in the index changed. Name a skill after what it does and describe it in the words of the task, or it is never loaded.
Scene 4
How many skills?
Each skill costs one line in the index, and the index is read with every request. Cheap for a few skills. What about many?
Slide to add skills, and compare the index with the request itself.
0.4 × the size of the request, with every exchange
A handful: almost free.
Over 1,000 requests: ≈ 75,000 tokens of index alone
Estimated from the measured cost of one index line (about 15 tokens) and of the request.
A few dozen well-chosen skills stay affordable; beyond that, every request pays for lines it doesn’t use. Keep the skills the assistant really uses, retire the rest.
Scene 5
Skill or tool?
Each need below calls for a skill or a tool. Place them.
Drag each need into the right column: “A skill” or “A tool”.0/5 sorted
No mouse? Tap a need, then a column.
A skill only adds text to the context window, at the moment a task needs it: it tells the LLM how to work. A tool gives it a new ability: reading a system, or acting in the outside world.
Hype vs reality
- What the hype says
“A general AI already writes the way we do.”
What actually happensIt writes well, its own way. A skill brings your rules, only when the task needs them.
- What the hype says
“Skills give the AI new powers.”
What actually happensA skill is instructions, added to the context when needed. Powers come from tools, which let it act on the outside world.
- What the hype says
“Write the procedure down and it will be followed.”
What actually happensOnly if the LLM finds it: in the index it sees a name and a description, nothing more. Described vaguely, a skill is never loaded.
Under the hood
A skill is a folder with a text file.
skills = discover("skills/") # one folder per skill, each with a SKILL.mdindex = "\n".join(f"- {s.name}: {s.description}" for s in skills)system = BASE_PROMPT + "\nSkills you can load:\n" + index # one line eachdef load_skill(name): # a tool the LLM can call return read(f"skills/{name}/SKILL.md") # the full sheet, only when neededIn 3 sentences
- A skill is instructions for one kind of task, with a name and a short description.
- The LLM keeps only the index in its context window and loads the full skill when a task needs it.
- You specialize it by writing good skills, one per job and described in the words of the task, and by giving it the right tools.
Did this make sense?
0/9 concepts unmagicked
Go to the challenge- 01LLMAvailable · How can it write so well without understanding? · Available
- 02ContextAvailable · Why does it forget what I said earlier? · Available
- 03PromptAvailable · Why are my results mediocre? · Available
- 04HallucinationsAvailable · Why does it make things up? When can I trust it? · Available
- 05RAGAvailable · How do I make it use our internal documents? · Available
- 06ToolsAvailable · How can it act, not just talk? · Available
- 07AgentAvailable · What is an agent, concretely? · Available
- 08SkillsAvailable · How do we specialize it without retraining? · Available
- 09Limits & safetyAvailable · What must I never trust it with? · Available
Solve the sandbox challenge to unmagic this concept.
Next step
What must I never trust it with?
What you never hand to a stranger, however gifted
Use this journey with your teamsRecorded with gpt-oss-120b, Oct 10, 2026.