Concentrating your best people does help, but you can't get the equivalent of the best people by just clustering together enough people.

Not sure about this either. It seems like a few good people can be as effective as a great person, and a few great people as effective as a fantastic person, especially when you're looking for things that are broader (design an airplane) rather than deeper (design general relativity). It's very possible we've hit saturation and so this isn't as noticeable; the few great people aren't competing against one fantastic person, but a few fantastic people.