Hagen (Robert Duvall) is the Godfather's adopted son, and unlike all the Corleones, he's of German-Irish descent. Since he isn't blood, he's not in line to become the next Don, though he considers himself to be just as much a son as the other brothers. Instead, Tom is pegged to become the consigliere, the chief adviser and lawyer to the Godfather.
He gives sharp advice to Sonny (which Sonny fails to take), because he understands that the killing that occurs in their line of work isn't personal, but "just business." He also helps propose offers (the kind that people can't refuse) to men like Jack Woltz, the producer who's preventing Johnny Fontane from getting a role.
While Tom isn't utterly unprincipled (he's one of the "good" characters, relatively speaking), he also has business savvy that is a bit less scrupulous than Vito's. For instance, he sees that drug dealing is part of the future of organized crime and advises getting involved instead of objecting to it. But Vito's not going for it.