I am so happy we have this system worked out because this way we're both happy. Theo doesn't have to bounce up and down uncomfortably in a corner, holding his knees together because he has to go and no one will take him out, and I don't have to neurotically wonder every 30 minutes whether he's going to have an accident in the house if I don't take him outside.
Now this isn't full-proof. Sometimes Theo will "say" he has to go, when really he just wants to go outside and play fetch with the tennis ball in the backyard. Sometimes he'll say he has to go because he knows it'll get me off my butt and he has a better chance of enticing to a game of fetch (it's always about the darn fetch with that boy), but I'd say at least 8 times out of 10 it results in a successful pee. I'll take it!
How did we teach him this? I have no freaking clue. But we definitely have taken steps to make sure we don't mess it up. First off, we don't ever use the word "out" with him unless we're talking about pottying. I'll say outside if necessary, but usually if I'm referring to going outside I'll just mention the activity we're about to do. For example, when we're about to go on a walk, I'll say "Let's go for a walk!" rather than "Let's go out!". Second, the minute we're outside after he's proclaimed he needs to go out, I tell him to make his business so it's clear why we're there. Theo won't go in the backyard anymore. I played too much fetch with him out there and now it's officially living space. So when I take him out to go, I snap on his collar and leash and walk him across the street and wait for business to happen. If it does, it does, if it doesn't, it doesn't. Oh well, false alarm. Sometimes I'll fetch play with him after, otherwise back in the house we go. But if I ask if he needs to go out and he says yes, then across the street we go. I think that really helps reinforce what I'm asking.
There have been times that I've wondered if Theo actually understands what I'm asking him, or whether he's just responding to my tone of voice. I've actually tested it a few times. I'd say "Theo, do you need to go [some random one-syllable word not rhymning with out in any way]?" Nothing. That dog knows what I'm asking, and he's darn smart about it.