You mean, like, at Game Freak?
Um… good question.
They definitely seem to have a lot of stock ideas, like there’s always a comparatively useless Normal-type based on a small omnivorous mammal, and there’s always a comparatively useless (except Staraptor) Normal/Flying-type based on a generic bird, and there’s often a cute little Electric rodent thingy, and so on… and I guess for those it’s sort of a paint-by-numbers thing, which makes me suspect they have a target number of new Pokémon they want to release in a generation and don’t much care how they get there. Not that they don’t still have awesome ideas too, of course.
I think sometimes they just go to the zoo or whatever and chill until they see something awesome. Or read obscure zoology textbooks. Honestly that seems to me like as good a way as any. ‘Truth is stranger than fiction,’ so they say, and nowhere is that more the case than in animal biology. On that note, I find it bizarre that they have yet to concoct a platypus Pokémon (though I suppose one of the stranger things about the platypus is that it lays eggs, which is standard for Pokémon).
Other times they go delving into Japanese folklore, and in my opinion that’s where some of the most fascinating and quirky designs come from. Whereas designs based on bizarre real animals have the undeniable charm of being weirder than anything a human mind could invent, designs based on folklore have a certain timeless quality to them – myths and monsters persist for a reason; they resonate with certain aspects of our psychology, and when you have such powerful ideas available, why not work with them? It helps, naturally, that Japan has a long-standing cultural fascination with describing and categorising the otherworldly (which, of course, was one of the major influences on Pokémon from the start).
See, I actually don’t have huge problems with the way Game Freak go about creating new Pokémon. I think in many ways they’ve got it absolutely right. I just wouldn’t do as much of it. I have something of a ‘less is more’ approach to the whole thing. Given the choice, I would rather do more work with an existing Pokémon and use it to tell more stories than create an all-new one that serves essentially the same purpose. I also think that a lot of Pokémon would benefit greatly from the added attention. There are a great many fifth-generation Pokémon that, in my opinion, came so close to getting the whole thing fantastically right – Darmanitan, Braviary, Cryogonal, Heatmor – and it really does pain me that the designers wasted their time on blatant filler like Watchog, Basculin, Unfezant and Emolga when they could have spent it really thinking about some of those others. I think we have enough Pokémon now that we don’t actually need another 100+ in every generation – I would totally be happy with 30 or 40 if they were all as well-done as, say, Chandelure.
As you might have gathered from that last paragraph, my entries from last year have rather a lot on my thoughts about this if you want more; I hope I’ve managed to explain the main salient points, though.