Concepts are the building blocks of higher-order cognition and consciousness. Building on Conceptual Spaces Theory (CST) and proceeding from the assumption that concepts are inherently dynamic, this paper provides historical context to and significantly elaborates the previously offered Iterative Subdivision Model (ISDM) with the goal of pushing it toward empirical testability. The paper describes how agents in continuous interaction with their environment adopt an intentional orientation, estimate the utility of the concept(s) applicable to action in the current context, engage in (...) practical action, and adopt any new concepts that emerge: a largely pre-intellectual cycle that repeats essentially without interruption over the conceptual agent’s lifetime. This paper elaborates utility optimization by establishing three constraints on concept formation/evaluation – non-redundancy, distinctiveness, and proportionality – embedding them in a quasi-mathematical model intended for development into a formal logic. The notion of a distinctor – a quality dimension of the conceptual space in focus at any given time, used for making what we call a difference distinction – is key. The primary contribution of the revised ISDM is the way it relates concepts to action via utility optimization/actualization and the way it describes the emergence of quality dimensions through trial-by-action (trial and error), something previous presentations of CST have failed to address. (shrink)