Anyone can claim themselves to be an ‘iemoto’. There is really no prerequisite to becoming one. One doesn’t have to do anything. You and anyone reading this can proclaim themselves ‘iemoto’ tonight, and tomorrow they will be iemoto!
On the other hand, being recognised as iemoto by others is a different matter. One gains recognition in a number of ways, or usually in a combination of many ways. Being better than just about anyone else at performing/teaching the shakuhachi is one, but not the only way.
Using highly developed socio-political skills is another way. Inheriting the whole set up from your father/mother/husband/brother etc., is another way. Having your own notation system and publishing scores of complete repertoires using that notation, and having your own playing style and unique repertoire are also ways.
Universal recognition almost always needs more than one of the above and/or prerequisites not mentioned. Becoming an ‘iemoto’ has to do with power. The power to, for example, dictate the way or style of playing a piece, what the official repertoire is, what notation is to be used, who becomes what rank and how, etc. It’s about the power to collect dues and other moneys and the power to decide how to spend that money. The power to get others to perform one’s compositions. The power to demand the trappings of respect. The power to go down in history, for example, by being included in genealogies found in obscure PhD dissertations. The list goes on.