Inspired by the cap and the gown, that's on the coat hook
On a simple level he is stating that he can get inspiration from mundane random sources such as cap gowns and coat hook.
On a deeper level when GZA says “inspired by the cap and gown that’s on the coat hook” i think he’s referencing growth in knowledge, since a cap and gown represent graduation in educational institutions. So his main aim is to ascertain knowledge in order to have substantially “driven raps”. Referenced in the line before.
To help improve the meaning of these lyrics, visit “Alphabets” by GZA Lyrics and leave a comment on the lyrics box