Method B is used when the knowledge you need to encode lives primarily in documents: policy manuals, compliance frameworks, standard operating procedures, technical specifications, clinical protocols, legal guidelines, and the institutional records that accumulate in every mature organisation. It is the primary method for HR, where knowledge is distributed across employee handbooks and policy archives. It is a significant component for legal, healthcare, and architecture, where written standards carry force that expert judgement alone does not.
The fundamental challenge with document extraction is not finding the documents. It is reading them correctly. Institutional documents are written for the person who already understands the context, not for the person trying to understand it for the first time. They describe what to do, often with precision, without describing why; which means that the edge cases the document does not cover are invisible to a reader who does not already know they exist. They contradict each other, in the way that documents written at different times by different people in a changing organisation always contradict each other. And they have gaps: areas where there is no written policy because the situation has never arisen or because the answer is assumed to be obvious to anyone in the role.
All three of these problems (decontextualisation, contradiction, and gaps) produce SKILL.md errors if the document extraction is done naively. The three-pass framework is designed to surface and address all three.
Read the full document corpus with a single purpose: identify every explicit statement of policy, standard, or required behaviour. Write each one down as a candidate SKILL.md instruction in the form "The agent should [do X] when [condition Y] applies."
Do not interpret. Do not infer. Do not add context. In Pass One, you are a transcriptionist with a reformatting task: you are converting institutional rules from document language into instruction language. If the employee handbook says "all requests for schedule changes must be submitted at least five working days in advance," the Pass One extraction is "The agent should inform users that schedule change requests require at least five working days' notice." Nothing more.
Credit analyst example: Pass One extractions from a bank's credit policy manual:
Document Statement
Pass One Extraction
"Debt service coverage ratio must exceed 1.25x for all term lending"
The agent should flag any term lending application where DSCR is below 1.25x
"Sector concentration limits apply as per Appendix B"
The agent should check the borrower's sector against current concentration limits in Appendix B
"All credit decisions above £10 million require dual sign-off from the credit committee"
The agent should route any credit decision above £10 million for dual sign-off
"Borrower financial statements must be no more than 12 months old at the time of assessment"
The agent should reject or flag financial statements older than 12 months
The volume of Pass One output is typically large. A mid-size organisation's policy corpus will produce hundreds of candidate instructions. That is expected and correct. The purpose of Pass One is completeness (getting everything out of the documents) rather than quality. Quality comes in Passes Two and Three.
Read the Pass One output as a set of instructions and identify every pair of instructions that conflict with each other. Do not attempt to resolve the contradictions at this stage. Map them and document them.
Contradictions in institutional documents fall into three categories.
Temporal contradictions occur when a newer document supersedes an older one but both remain in circulation. The 2019 credit policy says the maximum unsecured exposure is £5 million; the 2023 update says £8 million; the 2019 document was never formally withdrawn. Both are in the corpus. Pass One extracted both. Pass Two identifies them as contradictory.
Jurisdictional contradictions occur when a global policy and a local implementation guide conflict. The group credit policy says all lending decisions require a sector risk assessment; the regional implementation guide exempts facilities under £2 million from sector assessment because the administrative cost exceeds the risk management benefit. The global standard and the local practice give different answers.
Interpretive contradictions occur when two documents cover the same situation but with different implied standards. The data retention policy says "financial records must be retained for seven years" and the data privacy policy says "personal data should not be retained beyond its purpose." A customer financial record containing personal data falls under both policies: and they give different instructions about how long to keep it.
Contradiction Type
How It Arises
How It Appears in Pass Two
Temporal
Newer policy supersedes older; older not withdrawn
Two instructions with different thresholds, limits, or requirements for the same situation
Jurisdictional
Global and local policies cover the same situation differently
Two instructions that apply to the same query but give different answers depending on scope
Interpretive
Two policies overlap with different implied standards
Two instructions that are both individually correct but produce conflict when a query falls under both
The contradiction map is a working document, not a SKILL.md artefact. Its purpose is to generate a list of questions for the domain expert. Before you complete the SKILL.md, you need an answer for each mapped contradiction. In most cases, the answer is authoritative: someone in the organisation has decision-making authority over the policy in question and can resolve the contradiction definitively. In some cases, the answer is that the contradiction is unresolved at the organisational level; which means the agent needs an instruction for how to handle it: typically, to flag the ambiguity to the user rather than applying either version of the conflicting rule.
Credit analyst example: Pass Two contradiction: The group credit policy requires a full sector risk assessment for all lending. The regional guide exempts facilities under £2 million. Resolution question for the domain expert: "Which policy takes precedence for the regional portfolio, and should the agent apply the exemption automatically or flag it for human confirmation?"
Re-read the Pass One extraction with the question: "What common situations in this domain are not covered by any instruction in this set?"
Gap identification is the hardest of the three passes because it requires you to have enough domain knowledge to know what questions the document corpus should answer but does not. For this reason, Pass Three is most effectively done in collaboration with the domain expert, ideally in a thirty-minute follow-up session after the Method A interview. You bring the gap list; the expert confirms which gaps are real policy voids that need resolution and which are situations the policy covers by implication that you did not recognise.
Real policy voids (situations genuinely not covered by any document) produce one of two SKILL.md instructions.
Low-stakes gaps: The void is in an area where the consequences of a reasonable judgement call are manageable. The SKILL.md instruction is: "For situations not covered by the documented policy, apply the principle most consistent with the policy's evident purpose and tell the user that you are doing so."
High-stakes gaps: The void is in a compliance-sensitive, legal, clinical, or financially material area. The SKILL.md instruction is: "For any situation not covered by documented policy in a compliance-sensitive area, escalate to the relevant human authority and do not attempt to resolve the ambiguity."
Credit analyst example: Pass Three gap: The credit policy specifies how to assess borrowers with audited financial statements. It does not address borrowers who provide management accounts only (common in mid-market lending). This is a real gap. Resolution: the expert confirms that management accounts require additional verification steps (independent revenue confirmation, site visits, or third-party references) none of which are documented. These become SKILL.md Principles.
The three passes build on each other. Pass One produces the raw material. Pass Two tests its internal consistency. Pass Three tests its completeness against the real world.
Pass
Input
Purpose
Output
One
Full document corpus
Extract all explicit rules
Candidate SKILL.md instructions (high volume, unfiltered)
Two
Pass One output
Map contradictions between instructions
Contradiction map + questions for domain expert
Three
Pass One output + domain knowledge
Identify situations not covered
Gap list with low-stakes/high-stakes classification
After all three passes, you have three artefacts: a large set of candidate instructions (many of which will survive into the SKILL.md), a contradiction map that needs authoritative resolution, and a gap list that needs expert input. The candidate instructions become the foundation of the Principles section. The contradiction resolutions become explicit instructions about which policy takes precedence under which conditions. The gap resolutions become either judgement-with-transparency instructions or escalation instructions, depending on the stakes.
The three-pass framework does not replace Method A. It complements it. In domains where knowledge lives primarily in documents (HR, operations, regulatory compliance) Method B is the primary extraction method, and Method A serves primarily to resolve the contradictions and gaps that Method B surfaces. In domains where knowledge lives primarily in expert heads (finance, sales, creative work) Method A is primary, and Method B provides the documented standards against which expert judgement is calibrated. Lesson 5 teaches how to choose and combine the two methods.
Use these prompts in Anthropic Cowork or your preferred AI assistant to practise the document extraction framework.
What you're learning: Pass One is mechanical but requires discipline. The temptation to interpret or add context is strong: practising the extraction as pure transcription-with-reformatting builds the restraint that keeps Pass One output clean and uncontaminated by assumptions. Ambiguous statements identified here become candidates for Pass Two and Pass Three analysis.
What you're learning: Contradiction detection requires reading instructions as a set, not individually. Each instruction may be perfectly reasonable on its own: the conflict only appears when two instructions apply to the same situation. Training your eye to spot these conflicts is the core skill of Pass Two. The resolution questions you draft are the bridge to the domain expert who can resolve them authoritatively.
What you're learning: Gap identification is the hardest extraction skill because it requires knowing what should be there, not just what is there. Working with AI to generate candidate gaps builds your ability to see the negative space in a policy corpus: the situations that are conspicuous by their absence. The low-stakes/high-stakes classification directly produces the two types of SKILL.md gap-handling instructions.
Method B uses three passes to convert institutional documents into SKILL.md instructions: Pass One extracts explicit rules, Pass Two maps contradictions, and Pass Three identifies gaps. The three-pass discipline prevents the most common error in document extraction: mixing rule extraction with interpretation in a single undifferentiated pass that produces confused output.
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