One complaint against Tom was that "he's not even Italian, let alone Sicilian." Worse, he also had blond hair and a pale face, not dark hair and skin.
Vito made him "consigliere" because he performed a key function, as a lawyer. Vito did, in fact, want to move his, and other families, in the direction of greater respectability. Tom would have been the "point man" in such an effort. In that context, his "blond hair and a pale face," was an advantage. At the end of Vito's life, his family owned:
"tremendously valuable real estate in midtown New York, whole office buildings. It owned, through fronts, partnerships in two Wall Street brokerage houses, pieces of banks on Long Island, partnerships in some garment center firms, all this in addition to its illegal operations in gambling."
But existential threats (the rise of other families) forced Michael to move in the opposite direction, of acting in an "extralegal" manner, just to survive. In that kind of a situation, you need the most "Sicilian" person around, both in looks and in manner. Tom finally figured out that he was not that man.
In Chapter 30, such a Sicilian, Alberto Neri, a Michael choice, was described as follows:
"He was immensely strong...people were afraid of him because of that strength and his unbending attitude toward what was right and wrong... If he disagreed with a group's attitude or an individual's opinion, he kept his mouth shut or brutally spoke his contradiction. He never gave a polite agreement. He also had a true Sicilian temper and his rages could be awesome."
Michael was also that man, arguably more so than his father. In Chapter 9, it was Michael who "realized that Sonny and Tom were off-center on this guy Sollozzo,[who later killed Sonny] they were still underrating him..."
And Chapter 29:
"But he was not to get his necessary year because fate itself took a stand against him, and in the most surprising fashion. For it was the Godfather, the great Don himself, who failed Michael Corleone."