How can isolation of a group result in a new species?

Species evolve over time based on their environment.

If part of a group of a species gets isolated into a new environment, then both species (the initial environment and the new one) will evolve differently because of their different environments and in result become different.

So since they both evolve differently based on their different surroundings, the group that was isolated becomes a new species. 

Yes it is hereditary because of the penis