The New Skill in AI is Not Prompting, It’s Context Engineering

July 3, 2025

Hand-drawn Venn diagram titled “Context Engineering.” An outer circle labeled “Context” encloses overlapping colored ovals: Instructions/System Prompt, Long-Term Memory, State/History (short-term memory), Available Tools (with smaller Structured Output), User Prompt, and a central Retrieved Information (RAG)

Context Engineering is new term gaining traction in the AI world. The conversation is shifting from “prompt engineering” to a broader, more powerful concept: Context Engineering. Tobi Lutke describes it as “the art of providing all the context for the task to be plausibly solvable by the LLM.” and he is right.

With the rise of Agents it becomes more important what information we load into the “limited working memory”. We are seeing that the main thing that determines whether an Agents succeeds or fails is the quality of the context you give it. Most agent failures are not model failures anyemore, they are context failures.

Source: The New Skill in AI is Not Prompting, It’s Context Engineering

More on contexts versus prompts, following on from recent posts.