What they meant by "Intellectual Inbreeding" is the sort of restricted group think you get, when ideas or practices have been the province of a small group of people.
We see this very clearly in our famous and powerful Bird Island exercise, where groups can get stuck on a particular design, and can't see the wider possibilities. Maybe they have built a design that reaches 60cm, and think that if they really push everything to the limits, they might reach 75cm, little knowing that the best practice design is far taller.
Intellectual Inbreeding is what happens when the pool of ideas is too limited, and people can't think outside the box, to bring in new ideas and topics. Intellectual inbreeding results in a restricted meme pool.
The way to beat Intellectual Inbreeding is to bring in ideas from elsewhere, from outside the meme pool. You can do this through peer assist, for example, or through knowledge learning visits. In the Bird Island game, we open the doors and bring in people from other teams to share their knowledge and ideas. Often, while the team was racking their brains to take their design up to 75 cm, a member from another team might come in having built a design that already reaches 120 cm.
What happens then, is dramatic. You can almost see the scales falling from people's eyes, and you can almost hear the sound of the penny dropping.
Intellectual Inbreeding is one of the most dangerous outcome of siloed organisations. Use techniques such as Peer Assist to break the silos, exchange the ideas and experiences, and expand the meme pool. A healthy meme pool leads to a healthy knowledge ecosystem.