B) Have teams use their own proposal format

Allowing each team to use their own format enables each team to highlight their unique strengths. However, it makes it hard for the team to create a proposal, as they need to start from scratch, and it makes it very difficult to compare and prioritize projects.

How do you compare a new service proposal from an experienced team - that explains how they are using their past experience to significantly improve an existing service - to an inexperienced team - with an unproven claim to disrupt an existing service and the promise to conquer the existing market?

In other words, how to select Google over Yahoo, when Google was just an idea and Yahoo a well-established market leader in web searches. 

No proposal is the same. Instead of using the same template to make proposals comparable, have teams follow the same process. That way, you can compare proposal quality and teamwork quality when prioritizing and selecting new service development teams. Organizing for Innovation offers such a process, and enables the selection of project teams based on teamwork quality, which is the best predictor of future success.